In a significant development, the Hellenic Parliament is considering a proposal that would extend the option of financial statement review – instead of a full audit – to a larger cohort of businesses. Currently, from 2023 onward, companies with an annual turnover of up to €200,000 are subject to a review of their financial statements by a certified auditor or audit firm rather than undergoing a full audit, which requires audited financial accounts.
Proposal Details And Expansion Of Thresholds
The proposal, introduced by DISI, seeks to extend this regime to companies with an annual turnover of up to €900,000. The rationale behind the measure is to ease the administrative burden on smaller enterprises and multi-company groups that often struggle to comply with the rigorous demands of international financial reporting standards.
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Tax Authority Concerns And Revenue Implications
However, the proposal has met with resistance from the Tax Department. During a recent debate in the Parliamentary Commerce Committee, the Tax Commissioner, Sotiris Markidis, warned that raising the threshold to €900,000 would result in approximately 66% of companies being subject only to a financial statement review. He argued that as the ceiling increases, the state stands to lose significant revenue – citing a potential revenue risk of €0.5 billion.
Industry Reactions And Comparative Analysis
Markidis further cautioned that the streamlined review process lacks the detail of a full audit, potentially facilitating tax evasion among small enterprises – a concern that has precedent in the market. Representatives from the Small and Medium Enterprises Association (SELK) and the Banks Association have argued that the measure should target only very small companies. Additionally, a spokesperson for the Central Bank has recommended against the proposal in its current form, suggesting instead a hybrid review system for businesses with turnovers up to €900,000.
Establishment Of A Financial Reporting Standards Council
In a related legislative effort, the Commerce Committee also reviewed a second proposal by DISI, which would establish a Council for the Determination of Financial Reporting Standards. This council would be responsible for setting, monitoring, and evaluating the financial reporting standards applied by small companies, aiming to reduce administrative burdens while ensuring compliance with international practices.
Future Directions And Administrative Considerations
Industry insiders, including SELK and banking representatives, maintain that the measure should only encompass the very smallest enterprises. Meanwhile, the Tax Department and other stakeholders continue to emphasize the potential fiscal risks associated with broadening the turnover threshold. Furthermore, a representative from the Central Bank noted that the new financial standards council should ideally operate independently of the Ministry of Energy and the Department of Company Registrations, suggesting a reassignment of its oversight to either the Ministry of Finance or SEM’s regulatory framework. The final decision now rests with the council of the respective associations.
