Some Gesy doctors are potential tax cheats, inland revenue boss says

Doctors enrolled with the national health scheme (Gesy) may be engaging in tax avoidance by exploiting a loophole in the law, while over 100 physicians have been flagged as having filed an inordinate number of treatment claims. At the House watchdog committee, Auditor-general Odysseas Michaelides pointed out that several doctors...

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Doctors enrolled with the national health scheme (Gesy) may be engaging in tax avoidance by exploiting a loophole in the law, while over 100 physicians have been flagged as having filed an inordinate number of treatment claims.

At the House watchdog committee, Auditor-general Odysseas Michaelides pointed out that several doctors are registered with Gesy as legal entities rather than as individuals.

In short, these doctors are operating in Gesy as corporations.

Whereas the effective tax rate for individuals is 35 per cent, the rate works out to just 20 per cent for corporations.

The auditor-general suggested that, in order to close this apparent tax avoidance loophole, the Health Insurance Organisation – the operators of Gesy and the body with which doctors enter into a contract – should bar legal entities from contracting with it.

This would require parliament amending the relevant legislation.

But his suggestion was shot down by Athos Tsinontides, the general manager of the Health Insurance Organisation, who said it would be unlawful to prevent companies from contracting with the HIO.

Tax Commissioner Yiannis Tsangaris said that of the 2000 doctors registered with Gesy, 253 are enrolled as corporations.

MPs were discussing the inflows and outflows with regard to Gesy, a few months before the system is set to go into its second phase by covering inpatient care as well.

Concerns were raised as to whether the system is paying into the economy – through income tax – as much as it is extracting through people’s contributions.

To date, a little over half of registered private hospitals and clinics healthcare facilities have expressed interest in joining Gesy.

More broadly regarding tax evasion in the medical profession, Tsangaris cited the complexities on checking doctors’ incomes, since a great deal of payments are still carried out in cash.

The Tax Department is gathering data on doctors’ personal assets from other entities, like JCC, and cross-referencing these with tax returns filed to detect any discrepancies.

“We’ve already identified a portion of doctors who may potentially be tax dodgers,” Tsangaris said.

And several doctors had not even filed tax returns at all.

Another matter raised by the auditor-general related to excessive compensation claims filed by physicians since Gesy went live a year ago.

Overall the Audit Office has tracked 190 individuals (doctors) who filed seemingly unreasonable claims. Of these, 11 persons filed for over €20,000 per month; 73 for more than €30,000 per month; 40 for over €40,000; 11 for more than €50,000; eight for over €60,000; and two for more than €70,000.

The most brazen claim belonged to a cardiologist who filed for €113,000 for just a month’s worth of examinations.

In another case, an ophthalmologist contracted with the National Guard – and who therefore should have been ineligible to work with Gesy – filed a claim for €16,000 for 18 medical acts carried out on the same day, of which 12 concerned cataract surgery.

This latter case could be referred to police, the auditor-general said.

For his part, Tsinontides said the HIO itself has flagged about 120 doctors found to have filed a large number of treatment claims per day.

“We’re not saying they’ve done something illegal. But we are looking into it,” he told MPs.

Also in parliament, representatives of the Medical Association warned that, come June 1 – when inpatient care is introduced into Gesy – private hospitals registered with the system could be overwhelmed with surgeries which many patients have been putting off for months.

Anastasia Symeou, of the Medical Association, said that free inpatient care could be exploited by patients going in for unnecessary surgery – and doctors obliging.

“Scalpels will go crazy…you’ll get tonsil operations where the patient has no tonsils,” she remarked.

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