Filenews 19 March 2023 - by Eleftheria Paizanos
Parliament will seek to reinstate plans to settle arrears of tax debts by instalments. These are plans that were implemented piecemeal from 2017 to 2022, due to the continuous extensions to the legislation given by the Parliament through the adoption of bills tabled from time to time by the parties. Although these plans have contributed to the influx of hundreds of millions of euros into state coffers, there are also reactions that these sometimes foster a culture of inconsistency. That is, that many taxpayers consciously do not pay their debts to the Tax Department, as they estimate that at some point the Parliament will legislate for the implementation of new gratuitous schemes, through which interest and charges will be written off.
As is well known, depending on the number of instalments that taxpayers choose to repay their tax debts, a proportional percentage of interest and charges is written off. Those who pay their arrears in a lump sum, i.e. with a single instalment, are written off 95% of the charges.
A typical example is the implementation of the latest tax arrears settlement plan, which expired in April last year, according to which 84% of taxpayers had paid their debts in one instalment.
At the same level was the percentage of those who had paid with one instalment in the previous plans.
It is worth noting that, with the initial plans, which were in place from July 2017 to 2021, the tax debts were settled until 2015. The plan included arrears for income tax, VAT, property tax, special contribution for defence, capital gains tax and inheritance tax. Due to the coronavirus pandemic, a new arrangement for overdue tax debts has been put in place to help taxpayers who have had a financial impact from COVID. Those who had joined the last plan, had settled debts for the tax periods from 1/1/2016 to 31/12/2019.
The new legislative effort
Tomorrow, Monday, two bills will be put before the Parliamentary Committee on Finance, by EDEK and ELAM. The ISDS proposal reintroduces the draft of overdue tax debts. The arrangement will be extended for tax debts until the 2021 tax year. Previously, taxpayers, in order to join the new repayment plan of their debts, will have to submit their pending tax returns, by June 30, 2023.
ELAM's proposal provides for the increase of debt repayment instalments to 120. According to the draft law, in order to make it easier for employers and self-employed persons to pay their arrears, the maximum number of equal monthly instalments should not exceed 120, instead of 60 provided for by law. According to the proposal, in case of a debt of up to €100 thousand, each instalment cannot be less than €50, while, in case the tax debt is over €100,000, the minimum instalment to be paid will be €1,852. In case the debtor does not pay for one month the instalment agreed with the Tax Department, then he will pay the amount of the specific debt along with the next instalment. Otherwise, the delayed dose will be distributed proportionally to the remaining doses.
The arguments of the parties
EDEK, when it had submitted the draft law, had put forward as an excuse the war in Ukraine, which led to the increase in energy costs and accuracy, as well as to the restrictive measures of the Government to deal with the coronavirus pandemic. As the rapporteur of the draft law, EDEK MP Elias Myrianthous, pointed out at the time, many taxpayers did not have the opportunity and the time to take advantage of the plans for the settlement of arrears, as they were included in the special support plans for businesses and employees implemented by the previous Government to deal with the effects of the pandemic. He also argued that some who participated in the plans were unable to pay the agreed instalments.
For their part, the ELAM MPs, stressing the need to increase the number of doses, invoked the pandemic. Tomorrow, the arguments of the MPs of the two parties will focus on the impact on taxpayers (natural and legal persons) of the Ukrainian issue, high inflation and rising interest rates.
Interest and charges of €139 million were written off.
According to official data, debts amounting to €705.1 million had been settled since the implementation of the plans, but the state will collect a total of €566.2 million, due to the write-off of interest and charges. It is worth noting that initially 40,080 arrangements had been made for tax debts of €972 million, from which the competent Department would receive €787.1 million. In total, 3,882 arrangements related to tax debts of €266.9 million were made. Some arrangements were cancelled as the beneficiaries did not apply the provisions of the scheme, i.e. they failed to pay a number of instalments.
From the analysis of the data of the Tax Department, it appears that most of the arrangements were made in 2018, a total of 11,066 created a debt repayment plan of €380 million, however, the funds resulted in an amount of €308.9 million. There are also a large number of arrangements made in 2017, if you take into account that the plan was implemented in July. In total, 9,245 arrangements were made, for an initial amount of tax debt of €323.4 million, while after the deduction the state received €265.6 million.
Moreover, in 2019, 6,099 arrangements were made for debts of €130.5 million, of which the state received €102.2 million. In 2020, 8,416 settlements were made for debts of €80.7 million. (the state will collect €63.5 million) and in 2021, another 5,254 settlements were made for debts of €57.2 million, but an amount of €46.7 million was collected.
The balance in the Parliament has changed
It is also interesting that the proposals were submitted during the Nicos Anastasiades administration, when in the Parliament the party balances were different from the current ones, without it being clear whether this will affect their approval or not. The last legislative regulation, which was approved in 2021 and concerned companies that were registered in the VAT Register and showed a decrease in turnover by at least 25% for the year 2020 (compared to 2019), was the product of a law proposal by DIKO.
In the past, the Tax Department did not take a positive view of the continuous extensions of the legislation on overdue tax debts, due to the poor culture that was maintained with them. On the other hand, it did not ignore the significant revenues that the state had from the settlement of debts by instalments.
