TAX AMNESTIES & TAX COMPLIANCE: THE CASE OF GREECETonia ...
TAX AMNESTIES & TAX COMPLIANCE: THE CASE OF GREECE Tonia Pediaditaki, Lawyer (LLM, DEA) Panel 4: Challenges in Operationalizing Taxpayer Rights November 19, 2015 International Conference on Taxpayer Rights Washington DC, November 18-19, 2015 2 Conflicting objectives? Tax Revenue Tax
Compliance 3 Types of Tax Amnesties Main features of Tax Amnesties Extent of coverage: Types of Tax Amnesties Standard Tax Amnesties Taxpayers eligible Type of tax or tax base Timing: How long is the programme available?
Standing Permanent Tax Amnesties Extensive Tax Amnesties Frequency Tax Amnesties aiming at the Repatriation of flight capital Benefits offered Voluntary Disclosure Programmes Extensions granted? Financial Other: eg. Anonymity
Leverage 4 Taxpayer behaviour and attitudes to compliance General Factors influencing taxpayer behaviour TAX AMNESTY PERSPECTIVE BUSINESS INDUSTRY Taxpayer is an individual economic actor seen as CUSTOMER? Tax amnesty seen as a PRODUCT to be sold? TAXPAYER SOCIOLOGICAL
Marketing? Get to us before we get to you! ECONOMIC PSYCHOLOGICAL 5 Tax Amnesty and Trust: the side-effects NON COMPLIANT TAXPAYERS (Target group of tax amnesty) COMPLIANT TAXPAYERS Tax amnesty offers a motivation to comply and come forward
Tax amnesty offered to noncompliant taxpayers induces: Revenue generation Loss of trust & tax morale Tax compliance risk for future compliance risk of tax base erosion 6 GREECE: I. Tax amnesties for Capital Repatriation Inspiration: Italian Tax Amnesty (Tax Shield, Scudo Fiscale) 1. Law 3259/2004 (Art. 38)
August 2004 July 2005 3% flat tax on capital already abroad when Law entered into force and repatriated through financial institutions in Greece 2. Law 3842/2010 (Art. 18) 23 April 2010 30 September 2011 5% flat tax if capital is repatriated and invested in Greece for 2 years 8% flat tax if capital is declared to Greek tax authorities but not repatriated
Law 3691/2008 on money laundering remained applicable (no criminal amnesty). 7 GREECE: I. Financial benefits of tax amnesties Tax Amnesty 2004 Tax Amnesty 2010 Goal announced: EUR 5-10 billion Goal announced: EUR 20 billion Capital repatriated: EUR 1.5 billion
Capital repatriated: ca. EUR 425 million Tax revenues: EUR 50 million Tax revenues: ca. EUR 25 million 8 GREECE: II. One-time-only tax settlement again, and again, and again 1. 1978 (until 1981) 2. 1988 3. 1991 4. 1994 very successful in financial terms (450 billion drachmas of taxes collected) 5. 2002 [for years 1999-2001] 6. 2002 [for years: 1993-1998] 7. 2004 [for years: 1998-2003]
8. 2008 [for years: 2000-2006] 9. 2009 [same tax amnesty as 2008] 10. 2010 [years: 2000-2009] 11. 2015 9 Greece: III. 2015 - Another tax amnesty under way? June 2015, new draft law on global tax amnesty to repatriate overseas funds to Greece public consultation but never submitted to Parliament - voluntary disclosure programme for limited time-period - 15% flat rate on declared offshore funds - tax obligation exhausted - tax certificate issued - criminal penalties waived !!! - agreement with Switzerland?
10 Pay tax, plus interest, plus applicable penalties, plus possible fines and jail Avail themselves of Voluntary Disclosure Programmes to pay tax plus interest and/or a penalty and/or a fine Pay tax when due Source: OECD (2015), Offshore Voluntary Disclosure Programmes, p. 10 11
Decision #1: Establish the Reason Decision #2: Determine the scope Opportunity for voluntary disclosure to ALL taxpayers Opportunity for voluntary disclosure to SPECIFIED taxpayers, for SPECIFIED duration in order to address a SPECIFIC issue. Available taxpayers + Open-ended (no specific date for terminating the program Available only to those who fit the criteria + Specified duration of the programme to all Decision #3: Establish the Terms What is the incentive for taxpayers to come forward?
General program OR Specific programme? Tax waived? [None, Some, or All] Interest waived? [None, Some, or All] Prosecution waived? Decision #4: Establish Reporting Requirements How does the taxpayer make the voluntary disclosure? - HOW? i.e Specified form, questionnaire, letter? - WHEN? i.e. at least 1 year late - WHO can make the disclosure? i.e. taxpayer/accountant/legal representative Decision #5: Consider the Opportunity for Intelligence Gathering Decision #6: uild a uild a
communication strategy Beyond assessing taxes, is there a desire to gather further information? - Identify methodologies - Identify schemes - Identify promoters - Identify information available - Design a communication strategy - Attract the targeted taxpayers and encourage them to use the programme - Communicate with the already compliant taxpayers to create an understanding of the programme and avoid resentment 12 Features of a successful tax amnesty programme Clear about its aims and terms Deliver demonstrable and cost-effective increases in tax revenues Be consistent with the generally applicable compliance and enforcement
regimes Help to deter non-compliance Improve levels of compliance of among the population eligible for the programme Complement the immediate yield from disclosures with measures that improve compliance in the long-term 13 How to integrate taxpayer rights into tax amnesty programmes? Fairness and equity principles! Care about non-compliant taxpayers who are the target of the program but also about law-abiding taxpayers Transparency and diffusion of information about voluntary disclosure programmes guidance notes, information packs etc. Confidentiality and use of information disclosed
No-name discussions ** OECD Standard on Exchange of Financial Account Information for tax purposes (2014) 14 15 Thank you! [email protected]
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