Cyprus is looking to mandate the use of credit card readers in businesses and service providers in an effort to tackle tax evasion, according to Finance Minister Harris Georgiades.
During his budget speech on Friday, the minister mentioned three measures the government would advance as part of efforts to boost tax audit and fight evasion.
The minister said mandating the submission of card readers by product and service providers will be advanced but he did not give any other details.
The move, if it eventually goes ahead, would emulate Greece, whose ministry had issued a directive for point-of-sale services (POS terminals) to be installed for all occupations including doctors, lawyers, electricians and plumbers and companies, including street kiosks, tourism related service providers such as hotels, travel agencies and car hire businesses – or face penalties.
Although helped by capital controls imposed in 2015, card transactions in Greece showed a 40 per cent rise early this year, boosted by the compulsory installation of card terminals, tax discount on online payments and the introduction of receipt lottery as an incentive for taxpayers.
Tax evasion in Greece was estimated at 6 to 9 per cent of the country’s economic output, or up to 32 per cent of state revenue at the end of 2016.
More than 1.8m debit cards were issued in the second half of 2015 after capital controls were imposed, out of a population of 11m.
Georgiades said the government in 2019 will also advance tax statements to be submitted by everyone, including people who don’t have to pay.
“Only this way will there be a comprehensive picture of our tax basis,” he said.
Another important change would be the procurement of a state-of-the-art electronic system, which has been budgeted.
Perhaps highlighting the importance of having the software was a statement by the auditor-general in parliament last month that many businesses declared one thing to VAT and another to the income tax without the department being able to cross check.