Tenerife Business Black Economy
A poll of business owners by a Tenerife business sales agent indicates that the black economy in Tenerife may be far larger than suggested by the official statistics.
Online, September 26, 2010 (Newswire.com) - A poll of Tenerife business owners indicates that the black economy on the Spanish holiday island is thriving.
Official OECD estimates put the size of the black economy in Spain at 19.8% of the country's Gross Domestic Product.
In the Spanish holiday island of Tenerife, the size of this untaxed and undeclared hidden economy is likely to be an even larger slice of the local island economy.
A recent poll of businesses for sale by FRINA, a Tenerife business sales agent revealed that 100% of all businesses questioned do not declare all of their earnings to the taxman.
Greece (25.2%), Italy (22.2%) and Spain (19.8%) top the European charts for the sizes of their black economies, but the figures are only estimates.
Figures leaked from the Ministerio de EconomÃa y Hacienda earlier this year put the size of the Spanish black economy even higher, at 23.8% of GDP.
The black economy is restricted to small and medium sized companies as large corporations in the Spanish economy do not work with black money.
Businesses in Tenerife are all small or medium companies, so a much higher proportion of the island economy is black.
The recent poll by the Tenerife business sales agent, FRINA Tenerife of over 30 business owners supports this.
100% of Tenerife business owners questioned admitted that they did not declare their entire turnover to the taxman.
Seven out of ten Tenerife business owners said that they kept two sets of books; one for the taxman and one for themselves.
The remaining three out of ten business owners do not keep any books at all beyond the minimal information they are obliged to admit to in their tax returns.
Businesses in Spain who pay tax under the modulo system are obliged only to make the most basic of tax returns, which means that there is no regulatory requirement to record their business accounts.
The effect of this is that a buyer of a Tenerife business for sale will not have accurate audited accounts with which to value a company.