ATHENS (Reuters) - Greek authorities said on Monday they had arrested 24 people in a crackdown on about 1,000 small businesses suspected of dodging capital controls and value-added tax by using cashless card-processing terminals linked to banks in Bulgaria.

Authorities said hundreds of small businesses - many in the tourism industry - were conducting cashless transactions using point-of-sales (PoS) devices linked to Bulgaria via Malta that went unrecorded in Greece, which has had capital controls in place for a year.

“We arrested 24 people who were using PoS machines connected with banks outside Greece, in Bulgaria and Malta, to evade tax,” Emmanuel Ploumis, head of the Greek police’s economic crime squad told reporters.

“That’s illegal according to the capital control rules,” he said, “The PoS should be connected only with Greek banks.”

Tax evasion in Greece is estimated at 6 to 9 percent of the country’s economic output, or up to 32 percent of state revenue.

The government imposed capital controls in June 28 last year to halt a flight of deposits that threatened to bring down the banking system.

Greek businesses can export money from the country only to pay their suppliers, and only with a special permit from the government and the central bank.

Individuals can withdraw only 840 euros in cash every 15 days from their bank accounts but they can make payments within the country with cards without limits.

Since the imposition of capital controls the use of plastic money has increased significantly as people sign up for credit and debit cards in record numbers, leaving an electronic trail for tax collectors in a country known for rampant tax evasion.

Ploumis said the authorities had found 971 companies equipped with a combined 1,195 PoS gadgets conducting transactions where the proceeds ended up in Bulgaria. That also meant the businesses evaded a 24 percent value-added tax due to the Greek state, he said.

He said the businesses involved included beach bars, car rental services and restaurants in Athens, Thessaloniki, Chalkidiki and on some islands.

“They could also withdraw about 2,000 euros per day from their bank in Bulgaria via an ATM in Athens when all other Greeks can take only 840 euros every 15 days”, Ploumis said.

More than 1.8 million debit cards were issued in the second half of 2015 after capital controls were imposed, out of a population of just 11 million.