The Implementation of Tax Indirect Auditing Methods in Greek Economy Against Tax Evasion

Abstract

This article aims to review and analyse the indirect auditing methods that were applied in Greece for the first time at the beginning of 2012 as a tax auditing tool, for the more comprehensive identification of taxable items. By employing the use of indirect auditing methods (mark-up method, net worth method, source and application of funds method, unit & volume method and bank deposits and cash expenditure method) an attempt is made to determine withheld taxable items, other than those measured by the tax forms and the official accounting books and taxpayers’ tax data, by utilizing the information from various sources and bodies. At the same time, a survey was carried out, on a randomly selected sample of 517 respondents, for analysing the awareness of Greek taxpayers regarding the use of indirect auditing methods as well as the general population’s awareness of their basic tax obligations. A total of 96.13% of the population were not aware of indirect audit methods while 79.88% expressed the belief that being aware of them can potentially increase citizens’ tax compliance. The survey highlighted that regarding indirect tax audit methods the level of knowledge of the general population is very low, necessitating the organized and systematic promotion of these new methods by the Tax Authority, which can lead to the disclosure of withheld (shadow) taxable items and thus achieve greater tax compliance in the long term.