Filenews 30 August 2022 - byEleftheria Paizanou
They do not pay up, as for the umpteenth time it emerges, from a report by the Audit Office. Despite the tools available to the Tax Department, with the placement of MEMO on property and the freezing of the bank accounts of inconsistent taxpayers, late collections are increasing and accumulating. There is little surprise among public opinion from the thousands of legal and natural persons who "steal" the state as it is common knowledge that the state has failed miserably to control tax evasion.
According to the report of the Audit Office for the Tax Department, which concerns 2020, arrears (direct and indirect taxation) including interest and charges amount to €2.34 billion, compared to €2.21 billion. in 2019.
From the analysis of the findings of the Audit Office, the accumulation of overdue revenues seems to be largely due to legal and natural persons who do not declare their actual income, avoiding paying the relevant taxes.
In detail, arrears of direct tax were €1.83 billion, compared to €1.62 billion in 2019. It is worth noting that an amount of €696.13 million or 38% is considered uncollected. In detail, the overdue direct tax revenues are:
- Amount of €1 billion or 55% refers to immediately receivable amounts due, for which the measures relating to the registration of a real estate encumbrance on immovable property (MEMO) and / or the freezing and seizure of amounts located in bank accounts (garnishment) have been applied or are expected to be applied.
- Amounting to €448 million or 24.38% relates to amounts not receivable after the completion of bankruptcy or liquidation proceedings, as well as amounts for which there is an ongoing liquidation procedure or bankruptcy proceedings of a natural person.
- 9,598 legal entities are still active taxpayers in the Internal Revenue Department system of the Department, while the uncollected total amount for this category in May 2022 amounts to €19 million.
- For 6,326 natural persons who are still active taxpayers in the system, the bankruptcy procedure has also been completed, while the uncollected total amount in May 2022 amounts to €30.6 million.
Moreover, arrears of indirect taxation (VAT) amount to a total of €510.57 million, compared to €594.3 million. last year, that is, there was a decrease of 14%. According to the report, 269 companies, although their liquidation process has been completed, are still registered in the VAT Register, resulting in the uncollected amount in May this year being €129.3 million.
Unemployed accountant, manager in a company
The Audit Office also identified a case of a taxpayer who in 2015, while declaring himself an unemployed accountant, between 2014 to 2020 was found to be a shareholder / director in two companies, which received €3 million from the state for the supply of medical products. Also, in 2014 he invested in another specific company, which deals with restaurants. In particular, although he cooperated with the state, he concealed his income. At the same time, the Audit Office identified transactions and exchange of shares between Cypriot companies operating in the field of betting, which were affiliated with a specific group (a total of 31 Cypriot companies) and which appear to either have no tax identification number, or not to submit income declarations for many years. At the same time, it also identified cases of foreign companies in Cyprus, which declared one turnover in income tax and another in VAT.
More were lost to JEPs
In addition to the loss of €204m, the Government has lost €204m from the reduced VAT with which foreign investors benefited, public revenues were lost, and from the recognition of revenues from construction projects for tax purposes. According to the Audit Office, construction companies were given the right (with a circular of the 80s) to choose, either to recognize the expenses and revenues of a project after the execution of 50% of the project, or to recognize the costs and revenues after the completion of the 90%. However, in most cases of foreign investors, the full amount of the price was paid in advance. Therefore, land development entrepreneurs were taxed a few or several years after receipt of the purchase price.
