Filenews 29 June 2024 - by Angelos Angelodimou
Improving the state's tax collection capacity is a big challenge for the Ministry of Finance, which is why it continues to promote measures in this direction.
As noted in the annual report of the Ministry of Finance for 2023, which was posted on its website a few days ago, a series of measures are being taken to prevent loss of revenue by the state.
More specifically, starting from the taxpayer register, it is noted that the direct tax base at the end of 2023 included 991,108 active taxpayer files and the indirect tax base 101,717 active taxpayers.
The direct tax base showed an increase of 44,591 taxpayers, compared to 2022, mainly driven by new registrations of employees and legal entities. The register of indirect taxation at the end of 2023 showed an increase of 4,738 compared to 2022, mainly stemming from the registration of legal entities.
In addition, it is noted that in 2023, 89.2 thousand taxes – Individuals (74.5 thousand) and Companies (14.7 thousand) have been imposed, with income tax payable €46.9 million. and refundable income tax of €9.0 million, excluding interest. In addition to these amounts, taxes were levied on Special Defence Contribution and Special Employee Contribution.
Massive imposition of taxes
As a follow-up to the work to clear the backlog, the automated mass imposition of taxes continued for tax years 2015-2020 for legal entities and for tax years 2018-2020 for natural persons.
In the year 2023, the following were liquidated:
-For Individuals, approximately 702,000 tax payers for the tax years 2018-2020, with income tax payable €191.8 million. and refundable income tax of €36.9 million, excluding interest and
-For Companies, approximately 123,000 tax payers for tax years 2015-2020 with tax payable, €19.5 million income and refundable income tax of €19.2 million, excluding interest. In addition to these amounts, taxes were levied on Special Defence Contribution and Special Employee Contribution.
Settlement of objections
Part of the backlog clearance campaign is to settle appeals relating to past tax years and the reporting time has passed. The number of unsettled appeals as of December 31, 2023 fell to 5,289 from 8,020 at the beginning of the year. It is noted that during the year a total of 15,146 new objections were received and registered for all types of taxes and within the year 17,879 objections were settled.
Campaigns
a) On-the-spot checks to verify the correct application of the Reduced VAT Rate of 5% for the purchase/construction of a house.
During the period January – August 2023, the Tax Department conducted a nationwide tax compliance campaign using the method of on-the-spot checks on residences to determine the correct application of the legislation governing the reduced VAT rate of 5% for the purchase or construction of a house. During this period, officers of the Department carried out 442 on-the-spot checks during which 215 persons were identified, of which 55 were found not to be the eligible applicants and the corresponding amount required to be paid amounts to €2.4 million.
At the same time, during the same period, as a result of the impact of the compliance checks, persons who were beneficiaries and no longer comply with the provisions of the legislation have come to the Department, voluntarily declaring the termination and paying the corresponding amount, which totals €8 million.
(b) Letters of Compliance
Since 2017, the routine activities of the Department and on the basis of resource availability have included data analysis with risk management practices and the sending of personalized letters informing taxpayers about non-compliance behaviours identified by the Department.
In 2023, 145 campaign compliance letters have been sent, identifying instances of non-filing of tax returns, while receiving rent amounts and numerical differences in tax return amounts with amounts in VAT returns.
In addition, during the same year, 1,193 tax compliance letters were sent to persons who sold shares of companies that directly or indirectly owned immovable property in the closed period and had to come forward to pay the Fee for the purposes of the Central Agency for Equal Burden Sharing and respectively the Capital Gains Tax if they had an obligation.
The procedure for the new computerised system
According to the report published by the Ministry of Finance, simulation tests of the implementation of the new system for Stage 1 were carried out in January and February 2023.
This pilot operation of the system was conducted with the participation of the staff of the Department of Taxation, the Taxpayers and their representatives. At the same time, during the period January 2023 – March 2023, a series of staff trainings on the system took place, as well as a series of webinars to taxpayers.
The system went into production on March 23, 2023, following the approval of the Project Council, as well as the successful penetration test, which was carried out by an independent authority. In addition, after the operation of the system for a period of approximately four (4) months, the Project Team, with instructions from the management, proceeded to upgrades of the system, in order to help its smooth operation.
At the same time, after the productive operation of Stage 1, it was decided to implement the project with an "Agile" methodology, so that the results of the implementation reach the taxpayer sooner.
This decision resulted in the delivery of the online registration functionality in December 2023. During 2023, the system had collected around €2 billion (indirect taxes) and yielded around €370 million. (VAT refunds), while through the system 480,000 VAT returns were submitted, 44,000 entries were processed in the Department's register and were used by 129,000 taxpayers.
It is noted that for Stage 1, all the prerequisites (including the control of the system by the EU) required by the project milestone for the Recovery Plan have been implemented, in order for the relevant payment request to be submitted.
Regarding the system, a service center has been operating since March 2023, which responds to the number 17700 and deals with system issues related to the Registry of the Department of Taxation, VAT and VIES. At the same time, the Project Team, with the possibilities offered by the new system for 2023, has undertaken the design of a "BI" database in conjunction with the design of standard reports for reuse by the competent sectors of the Department.
