Filenews 2 May 2023 - by Eleftheria Paizanou
Controls and exchange of information between member states' tax authorities are strengthened to address tax revenue foregone from sales made through electronic platforms, through the harmonizing bill submitted last Thursday to the plenary of the Parliament.
Amending the Law on Administrative Cooperation in the Field of Taxation will ensure the effectiveness of the exchange of information and avoid unjustified rejection of requests. At the same time, legal certainty for tax authorities and taxpayers is ensured, as the European Directive that will be incorporated into Cypriot law clearly defines the standard of reasonable relevance. Essentially, the new European directive will contribute to the effort of tax authorities to prevent tax evasion and the submission of inaccurate information when using digital platforms. In addition, Member States will be able to carry out joint audits. The European Commission has already sent a letter of formal notice to the Republic for non-compliance with the European directive. The bill was supposed to be approved by the end of 2022 but was tabled in parliament four months after the deadline.
The bill will implement new rules for the automatic exchange of information for the administrative session between tax authorities, which will respond to the rapid development of the digital economy and cross-border transactions offered through digital platforms. European authorities consider that the use of digital platforms has created a complex environment, where it is difficult to enforce tax rules that ensure tax compliance and determine the value of undeclared income.
According to the explanatory memorandum of the bill, the existing rules extend to the exchange of information in other member states, on sales or leases through electronic platforms, by imposing reporting obligations on electronic platform operators for cross-border transactions. This arrangement will achieve a level playing field with other businesses.
These obligations should also apply to operators trading within the European Union but not resident for tax purposes within the EU, but excluding government entities.
