Filenews 12 August 2025 - by Eleftheria Paizanou
There are incomes of professionals in certain professional categories that are considered high-risk and do not declare them to the Tax Department.
Complaints of possible tax evasion are made to the Audit Service and forwarded to the tax authorities for examination. At the center of the inspections were, among others, a company providing beauty services, kindergartens, investment companies and natural persons. The complaints concerned tax evasion but there were also allegations of money laundering.
The Tax Department proceeded with the criminal prosecution of taxpayers. Among other things, the complaints made concerned:
– In 2023, there were complaints against a specific person (Beauty Service Provider) for possible tax evasion. In February 2025, the Commissioner of Taxation informed the Audit Service that the examination resulted in taxes due in the amount of €30,959 for income tax, €1,215 for extraordinary defence contribution, €3,586 for the GHS and €5,758 for interest and charges for the years 2018-2022.
– In 2024, there were allegations of tax fraud, tax evasion and money laundering, with the participation of three Cypriot companies, through the purchase and sale of shares in 2012 and 2013. The investigation identified purchases and sales of shares in a very short period of time, which raise questions as to whether they are actual transactions between third parties based on the principle of commercial transactions or whether they are transactions between related persons of an interest-free lending type and/or there is an issue of additional taxes or fictitious amounts that may be related to issues subject to the Money Laundering Law. The Tax Department did not identify payments for stamp duties related to stocks from these companies.
The Audit Service has called on the Tax Department to investigate the issue of sales/transfer of shares of these companies and, where necessary, to impose taxes and stamp duty, in accordance with the legislation and, if necessary, to inform MOKAS.
– A company was deleted that had debts of €14 million VAT. It is the Blue Ocean company of tycoon Roman Abramovich. The issue is under the microscope of the parliamentary Control Committee.
– Allegations were filed with the Audit Service against a specific person, for possible tax evasion. Upon completion of the audits of the Tax Department, taxes due amounted to a total of €69,233, while the examination for direct tax purposes has not been completed.
– The Audit Service received a complaint against an investment company for money laundering. During the audits, the Tax Department found that this company has dividends from its subsidiary as its main income and claims administrative expenses that are not justified due to its activities. The competent department limited these expenses and imposed an additional tax until the year 2020, amounting to €41,792.
– Complaint about a specific property, worth €3-€3.5 million, which was sold by an individual to a group of companies but valued at €1 million. The complaint was sifted through by the Tax Department, which imposed an additional tax of €30,700 on one company.
– Complaint about tax evasion by a specific person. During the audits of the competent department, undeclared income from rent collections for the years 2015-2019 had been identified, totalling 35,130 sterling, for which it proceeded to issue taxes.
– Imposition of an additional tax of €37,218 on taxpayers who did not declare the income they had from rents.
– VAT tax certificate of €28,717 against a company, for non-issuance of a receipt for rapid test.
On the wall for sanctions
The Audit Office is putting up the Tax Department, through its latest report, in relation to the tax investigation of companies included in the U.S. sanctions list. These companies are based in Cyprus.
From the tax investigation of the Audit Service, various issues were identified, which were forwarded to the competent department in January last year. It is noted in the report that there was no in-depth and/or no tax investigation, while for a number of years taxes were imposed without any adjustment of taxable income and without control by the Department.
Also, cases were observed when the turnover declared to VAT was significantly higher (over 15%) than the turnover declared to the Department for income tax purposes, or turnover was not declared to the Department or relevant income declarations were not submitted, resulting in a potential loss of revenue for the state.
In October 2024, the Department informed the Audit Service that a specific company proceeded to limit expenses by imposing revised taxes for the years 2018-2021, with additional taxes of €57,870, collected by the Department.
Another company has terminated its activities since 2022 and was deleted from the VAT Register, while for other companies data were requested and/or are being examined.
