Prior actions included in the agreement with lenders on revenue administration reforms

As a prior action, the authorities will adopt legislation to:

a) on garnishments, eliminate the 25 percent ceiling on wages and pensions and lower all thresholds of €1,500 while ensuring in all cases reasonable living conditions; b) amend the 2014–15 tax and SSC debt instalment schemes to exclude those who fail to pay current obligations, to introduce a requirement for the tax and social security administrations to shorten the duration for those with the capacity to pay earlier, and to introduce market-based interest rates while providing targeted protection for vulnerable debtors (with debts below €5,000); c) Amend the basic instalment scheme/TPC to adjust the market-based interest rates and suspend until end-2017 third-party verification and bank guarantee requirements; d) Accelerate procurement of software for VAT network analysis and for further automation of the debt collection, embracing inter alia fully automatized garnishment procedures; e) adopt immediately legislation to transfer, by end October 2015 all tax- and customs-related capacities and duties and all tax- and customs related staff in SDOE and other entities to the revenue administration; all non-assessed audits reports made by SDOE since law 4321/2015 will be considered as detailed fact sheets to the tax administration.

The authorities commit to taking immediate enforcement action regarding debtors who fail to pay their instalments or current obligations on time. The authorities will not introduce new instalment or other amnesty or settlement schemes nor amend existing schemes, such as by extending deadlines.

Furthermore, the authorities, making use of technical assistance, will: i. enhance compliance. The government will by October 2015: a) adopt a fully-fledged plan to increase tax compliance; b) develop with the Bank of Greece and the private sector a costed plan for the promotion and facilitation of the use of electronic payments and the reduction in the use of cash with implementation starting by March 2016; c) publish the list of debtors for tax and social security debt overdue for more than three months.

ii. fight tax evasion. The authorities will by November 2015 produce a comprehensive plan for combating tax evasion based on an effective interagency cooperation which includes:

a)identification of undeclared deposits by checking bank transactions in banking institutions in Greece or abroad; b) introduction of a voluntary disclosure program with appropriate sanctions, incentives and verification procedures, consistent with international best practice, and without any amnesty provisions; c) request from EU member states to provide data on asset ownership and acquisition by Greek citizens, and how the data will be exploited; d) renew the request for technical assistance in tax administration and make full use of the resource in capacity building; e) establish a wealth registry to improve monitoring; f) adopt legislative measures for locating storage tanks (fixed or mobile) to combat fuel smuggling; g) create a database to monitor the balance sheets of parent-subsidiary companies to improve risk analysis criteria for transfer pricing;

iii. prioritise action on collectable taxes. By September 2015, the authorities will sign the Ministerial Decision allowing for the extension of the indirect bank account register to provide 10 years of transaction history. By October 2015, the authorities will reduce– taking account technical assistance - restrictions on conducting audits of tax returns subject to the external tax certificate scheme. By November 2015, the authorities will adopt measures to prioritise tax audits on the basis of risk analysis and not, as is now the case, year of seniority (i.e. year of write-off).

iv. improve collection of tax debt. To improve collection of tax debt the authorities will by October 2015 (key deliverable):

a) improve the rules on write-off of uncollectible tax; b) remove tax officers’ personal liabilities for not pursuing old debt, and c) propose, and implement in 2016, a national collection strategy including further automation of debt collection, and by November d) take necessary measures towards the timely collection of fines on vehicles uninsured or not undertaking mandatory technical controls, and of levies for the unlicensed use of frequencies; e) issue legislation to quarantine uncollectable Social security contribution debt; and f) improve the rules on write-off of uncollectible Social security contribution debt, and g) enforce if legally possible upfront payment collection in tax disputes.

v. improve collection of Social security debt. By September 2015 the authorities will: a) provide KEAO with access to indirect bank account registry and to tax administration data; b) create a single SSC debt database that will encompass all social security funds. The authorities will implement by end-December 2016 a central registry of contributors in coordination with the pension funds consolidation and complete the integration of social security contribution collection with the tax administration by the end of 2017.

vi. strengthen VAT revenues. The authorities will strengthen VAT collection and enforcement inter alia through streamlined procedures and with measures to combat VAT carousel fraud. They will adopt by October 2015 legislation to:

a) accelerate deregistration procedures and limit VAT re-registration to protect VAT revenue; b) adopt the secondary legislation needed for the significantly strengthening the reorganization of the VAT enforcement section in order to strengthen VAT enforcement and combat VAT carousel fraud. The authorities will submit an application to the EU VAT Committee and prepare an assessment of the implication of an increase in the VAT threshold to €25,000.

vii. reinforce the capacity of the administration. By October 2015, the authorities will secure the full staffing of KEAO, strengthen control capacity in IKA and reinforce the Large Debtors Unit, to improve its capacity on issues of liquidation and tax collection, and – with highly skilled legal advisers, supported by an international independent expert firm – for the assessment of debtor viability. By December 2015 the LDU will segment commercial debtors with large public debt according to viability status.

viii. strengthen the independence of the revenue administration. The authorities will by October 2015 adopt legislation (key deliverable)to establish an autonomous revenue agency, that specifies:

a) the agency’s legal form, organization, status, and scope; b) the powers and functions of the CEO and the independent Board of Governors; c) the relationship to the Minister of Finance and other government entities; d) the agency’s human resource flexibility and relationship to the civil service; e) budget autonomy, with own GDFS and a new funding formula to align incentives with revenue collection and guarantee budget predictability and flexibility; f) reporting to the government and parliament. The authorities will by December 2015 (key deliverable) appoint the Board of Governors and adopt priority secondary legislation of the law (key human resource, budget) on the autonomous revenue administration agency, so that it can be fully operational by June 2016.