Tax Evasion in the Greek Construction Sector

Tax evasion is a major and structural problem in the Greek economy, with serious consequences for economic development. As the construction sector in Greece is of particular importance on the country’s employment and GDP, the present study studies tax evasion in Greece focusing on a survey conducted among 154 accountants from 53 technical companies. The study firstly analyzes the concept of tax evasion and provides a thorough literature. Then the results obtained are critically assessed again the surveyed literature is classified in three categories, namely Tax Evasion Practices, Opportunities for Tax evasion on technical companies’ value chain and Effectiveness of potential measures against tax evasion. The main findings suggest that tax evasion is mostly carried out by companies registered in the country and that tax offenders use the method of physical registering in a country with a high VAT rate and carrying out technical activities in countries with low rates. Opportunities for tax evasion seem to exist along technical companies’ value chain, mostly related to transportation services, subcontracting and suppliers’ overbilling. Tax evasion by technical companies limits economic growth. The stabilization of the tax legal framework, the improvement of the tax control mechanism, the reduction of tax rates, contributions, fees, etc., as well as the tightening of fines and penalties, are considered necessary for limiting tax evasion. Suggestions for further study are assessed.