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

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Conflicting objectives? 3 Tax Revenue Tax Compliance

Types of Tax Amnesties Main features of Tax Amnesties ▪Extent of coverage: ▪Taxpayers eligible ▪Type of tax or tax base ▪Timing: ▪How long is the programme available? ▪Extensions granted? ▪Frequency ▪Benefits offered ▪Financial ▪Other: eg. Anonymity ▪Leverage Types of Tax Amnesties ▪Standard Tax Amnesties ▪Standing Permanent Tax Amnesties ▪Extensive Tax Amnesties ▪Tax Amnesties aiming at the Repatriation of flight capital ▪“Voluntary Disclosure Programmes” 4

Taxpayer behaviour and attitudes to compliance 5 BUSINESS INDUSTRY TAXPAYER SOCIOLOGICAL ECONOMIC PSYCHOLOGICAL General Factors influencing taxpayer behaviour TAX AMNESTY PERSPECTIVE Taxpayer is an individual economic actor  seen as CUSTOMER? Tax amnesty seen as a PRODUCT to be sold? Marketing? “Get to us before we get to you!”

Tax Amnesty and Trust: the side-effects NON – COMPLIANT TAXPAYERS (Target group of tax amnesty) ▪Tax amnesty offers a motivation to comply and come forward  Revenue generation  Tax compliance COMPLIANT TAXPAYERS ▪Tax amnesty offered to non- compliant taxpayers induces:  Loss of trust & tax morale  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 % 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 ▪Goal announced: EUR 5-10 billion ▪Capital repatriated: EUR 1.5 billion ▪Tax revenues: EUR 50 million Tax Amnesty 2010 ▪Goal announced: EUR 20 billion ▪Capital repatriated: ca. EUR 425 million ▪Tax revenues: ca. EUR 25 million 8

GREECE: II. “One-time-only tax settlement” again, and again, and again… (until 1981)  very successful in financial terms (450 billion drachmas of taxes collected) [for years ] [for years: ] [for years: ] [for years: ] [same tax amnesty as 2008] [years: ]

Greece: III 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

11 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

12 Opportunity for voluntary disclosure to ALL taxpayers Opportunity for voluntary disclosure to SPECIFIED taxpayers, for SPECIFIED duration in order to address a SPECIFIC issue. Decision #1: Establish the Reason 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 #2: Determine the scope 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 #3: Establish the Terms Decision #4: Establish Reporting Requirements Beyond assessing taxes, is there a desire to gather further information? -Identify methodologies -Identify schemes -Identify promoters -Identify information available Decision #5: Consider the Opportunity for Intelligence Gathering Decision #6: Βuild a communication strategy 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 - 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

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

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Thank you!