Analysis of the Factors Affecting Tax Evasion in Greece

Abstract

Purpose: This study is an attempt to capture the concept of tax evasion, to distinguish it from tax avoidance and to illustrate the magnitude of the problem in Greece. Design/Methodology/Approach: Time series analysis and regression analysis were performed to determine which factors affect tax compliance in Greece. Data were collected from three different directorates of the Greek Independent Authority for Public Revenue (IAPR), K.E.ME.EP. (Audit Authority for Large Enterprises), K.E.F.O.ME.P. (Audit Authority for Taxpayers with Great Wealth) and Y.E.D.D.E. (Services for Investigations & Safeguarding of Public Revenue). Findings:The results of the research showed that the amount of fines and taxes (related to tax compliance) imposed are statistically significant and positively dependent on both the number of audits and the amounts of money imposed as fines for each audit carried out by K.E.ME.EP. and K.E.F.O.ME.P., while for Y.E.D.D.E. the identified revenue foregone depends only on the number of completed audits. Practical Implications: Tax evasion is a phenomenon that has been of concern to the governments of all countries since ancient times, because it results in both the loss of state revenues and an unequal and unfair distribution of tax burdens. However, tackling tax evasion is a particularly difficult task, mainly because it cannot be easily detected and measured. Originality/Value: This research points out that frequent and effective audits, combined with high fines, are a tool to reduce tax evasion and increase tax compliance.

Assessing Corruption in Times of Crisis: Empirical Evidence from Greece

“…In addition, they assessed the effectiveness of measures taken to curb corruption as presented in Table 7 below, according to which 84.10% consider "direct accountability", 81.90% consider "equal application of laws & administration of justice without delay", 76.70% consider "reduction of bureaucracy" and 76.50% consider "improvement of control mechanisms" to be most effective. Kounadeas et al (2022) also indicated the importance of audits in fighting tax evasion/corruption. Ploumi (2014) had reported "equal application of laws & administration of justice without delay", followed by "e-governance/digitalization" and "stricter penalties".…”

Enhancing Internal Control Mechanisms in Local Government Organizations: A Crucial Step towards Mitigating Corruption and Ensuring Economic Development

“…The present study highlights challenges in revenue collection, including a poor administrative capacity, tax evasion, corruption, and political pressure. Kounadeas et al (2022) analyze the factors affecting tax evasion in Greece. Martinez (2015) emphasizes the significance of accountability and good governance in managing local government revenues.…”

The Effectiveness of Digital Payments in Tackling Tax Evasion in Greece

“…Payment by electronic means is recorded and it is easy to cross-check the revenues of businesses. Therefore, the more business revenues are derived from electronic payments, the more the likelihood of tax evasion is reduced (Kounadeas et al, 2022). Brockmeyer and Saenz Somarriba (2022) investigated whether the digitisation of transactions in an economy increases tax revenues and generally improves citizens' compliance with the tax system.…”

“…It is a phenomenon that hinders economic prosperity and growth, and therefore efforts are being made to reduce it (McGee, 2011). Particularly in the case of Greece, tax evasion is a major issue that has been plaguing the Greek economy for decades and has a significant impact on entrepreneurship and growth (Vousinas, 2017;Balios et al, 2020;Kounadeas et al, 2022).…”

“…Greek official authorities report that tax evasion involves amounts corresponding to 6%-9% of GDP. The main factors contributing to tax evasion in Greece are legislative and political and are linked to the complexity of the tax system and the way the public administration operates (Vlachos and Bitzenis, 2016;Vousinas, 2017;Balios et al, 2020;Kounadeas et al, 2022;Trigkas et al, 2021). They are also technological, as the country has not yet reached the desired levels of digital transformation (Boufounou et al, 2022).…”