Authors: Grigorios Lazos, Michail Pazarskis

Title: The Tax Certificate of the Certified Public Accountants and the Auditing Firms and its Importance for the Tax Administration and the Audited Companies

Abstract

The purpose of this study is to investigate the impact of the application of the tax certificate, issued by certified public accountants and auditing firms, to capital companies, on the financial results of the above companies as well as their determinants. In particular, an attempt was made to investigate the impact of the issuance of a tax certificate on the cost of sales, the gross margin, the expenses and the net margin, as they appear in the financial statements, of the examined companies. The tax certificate, according to the provisions of article 82 of Law 2238/94 (Income Tax Code), was introduced in the Greek tax framework, in the year 2011 and its issuance is possible after an audit carried out, according to an audit program prepared by the Independent Authority for Public Revenue in collaboration with the Accounting and Auditing Standards Oversight Board  and which is in accordance with the provisions of the International Standard on Assurance Engagements (ISAE) 3000, "Assurance Engagements Other than Audits or Reviews of Historical Financial Information". The sample of the survey consisted of companies, which were issued a tax certificate for a period of 5 years and specifically for the years 2011 to 2015. The data of these five years were compared with the corresponding data of the companies of the previous five years before the institutionalization of the tax certificate, i.e. the years 2006 to 2010. For the statistical analysis of the data the t-test for paired samples was used. The results of the survey, despite the fact of the extensive economic recession, of the examined period, showed the significant contribution of the tax certificate, in the improvement of the financial situation of the companies, due to the appearance of increased profits or the reduction of losses, as well as and in broadening the tax base. However, according to the investigation, there is room for improvement of the entire contribution of the tax certificate, taking into account the results of the audits carried out by the Tax Authority in companies that had already received a tax certificate. The present study has demonstrated the importance of the tax certificate for the audited companies, as the degree of reliability of their financial statements appears to have improved, while reducing the occurrence of tax provisions for unaudited years and limiting the risk arising from overdue tax from the audits carried out by the tax administration and the imputation of interest and fines by it. Also important is the contribution of the tax certificate to the Tax Administration, given the expansion of the tax base and the immediate collection of additional amounts of taxes. In addition, the research demonstrates the importance of the participation of certified public accountants and auditing firms in the whole process. Given the positive results of the research, it is proposed to restore the mandatory receipt of the tax certificate and not to obtain it on an optional basis, as well as the extension of this institution to more categories of companies.