The Greek tax administration is targeting restaurants and hotels suspected of cheating on VAT payments, with tens of thousands of inspections to be carried out this summer.
The Independent Authority for Public Revenue (IAPR) is sending out about 300 inspectors and plans to shut down establishments found to be in violation of tax regulations, according to media reports. Island resorts popular with tourists are the primary targets for the summer compliance program.
The IAPR was created in January 2017 at the behest of Greece’s creditors — the troika of the IMF, the European Central Bank, and the European Commission. According to reports, the volume of inspections has doubled since 2017, when the IAPR conducted 14,500 raids in tourist areas over the summer. The agency was established to reduce the political influence exerted by the Ministry of Finance, according to practitioners.
This year, the raids began in June instead of the usual start date of July 1. The IAPR reported that it has gotten much better results since it began in recent years swapping inspectors from various areas so that they could conduct inspections without being recognized. The compliance program runs through October 31.
Tourist-destination islands have long benefited from subsidized VAT rates, amounting to a 30 percent discount off Greece’s standard 24 percent VAT rate. That discount is set to expire July 1, after repeated extensions by the government.
In May Prime Minister Alexis Tsipras pledged a series of tax cuts, including a reduction of VAT from 24 percent to 13 percent on restaurant services, from 13 percent to 6 percent on energy and food, and from 13 percent to 11 percent on hotel accommodations. Noting that Greece’s standard VAT rate is among the highest in the EU, he has also called for reducing the standard rate to 22 percent, dropping the reduced rate from 13 percent to 12 percent, effective January 1, 2021.
The government, a coalition headed by the leftist Syriza party, faces a tough opponent in a snap election July 7. In the May 26 EU and municipal elections, the New Democracy party won 33 percent of the vote, about 10 points more than Syriza.