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Digital payments after the capital controls: Support measures and tax revenues
Category: Microeconomic Analysis
SubCategory: Others
Date: 04/07/2018
The use of payment cards in Greece more than tripled in value between 2014 and 2017. The penetration lifted off with the imposition of the capital controls and then remained on an uptrend, aided further by the measures of law 4446/2016. According to the findings of the study: (a) The law had a statistically significant, positive impact on card usage, especially in the second half of 2017, controlling for the effects of macroeconomic factors and capital controls; (b) The penetration of electronic payments had a significant positive impact on tax compliance, contributing at least 50% of the annual increase of VAT revenues in 2017. Nevertheless, the average level of card use in Greece has remained lower than the EU average, while it presents significant heterogeneity across sectors and geographical areas. Indicatively, card usage has remained limited in sectors with high risk of tax evasion. In conclusion, more targeted measures are warranted in order to enhance further the penetration of electronic payments, which would yield even greater fiscal benefits.
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