(Greece) – Members of the Greek police force have arrested 24 small business owners who are susptected of tax evation. Currently, around 1000 small businesses are caught up in the tax evasion scheme and the individuals are all accused of trying to avoid both capital controls and the value-added. Their method of doing so was to use a cashless credit card processing machine that has links to banks outside of Greece in Bulgaria, which allowed them to avoid paying taxes for a time. The devices allowed for cashless transactions with point-of-sales devices that were linked to Bulgaria by going through Malta. Transactions that were made on these devices were unrecorded for nearly a year. Many of the businesses in question were part of the tourist industry.
Emmanuel Ploumis, the head of the Greek police’s economic crimes division said that, “We arrested 24 people who were using PoS machines connected with banks outside Greece, in Bulgaria and Malta, to evade tax. That’s illegal according to the capital control rules. The PoS should be connected only with Greek banks.”
Tax evasion costs the Greek government a considerable amount of money and in the country’s current economic crises, they could use all the revenue they could get. Greece was recently approved for its third bailout since 2010 and the international creditors have said that the Greek government needs to increase revenue and cut back on spending. Tax evasion is responsible for up to 9% of the country’s total economic output or 32% of the state revenue.
Capital controls are thought to be responsible for this recent bout of tax evasion. However, the Greek government has recently eased up on the controls, which were put in place last summer in 2015 at the end of June to prevent people from withdrawing too much money at once. It was feared that mass withdrawals would cause the banking system to crash. Now that the country has hope for its economic future since accepting the third bailout, they felt that they could ease up on these capital controls.