The more the Tax Department strengthens its audits, the more businesses that break the law catch on to its pincers. Specifically, from the inspections carried out by the tax collectors in businesses in the coastal areas, which due to the summer holidays gather a large number of visitors, it was found that 60% were illegal.
Violations are mainly related to the failure to issue legal receipts or invoices to customers. At the same time, many businesses continue not to accept credit cards as a means of payment.
Targeted audits
The inspections were targeted at specific categories of businesses, such as water sports and water excursions, souvenir shops, as well as catering establishments in Paphos, Ayia Napa, Protaras and Larnaca. The audits are part of the implementation of the collection measure of business sealing, which has been in force since last June. In the last two weeks, due to the increased tourist traffic, the tax collectors of the Tax Department have intensified the controls on these businesses.
The tax collectors were lurking
According to information from "F", more than 100 unannounced inspections were carried out during this period, during which it was found that 60 businesses, after selling products or providing services, did not issue receipts to their customers.
Officials of the Tax Department lurked outside the businesses and, after the customers completed the transactions, they approached them asking to present them with the invoices or receipts they had received. During the inspections, it was found that the majority of businesses that broke the law did not issue receipts to customers.
There were also cases where businesses gave customers invoices with amounts other than the actual value of the transaction. At the same time, taxpayers received complaints from taxpayers that some businesses, when it came to small purchases, did not accept credit card payments. In addition, there were cases where businesses accepted payments only in cash, thus hiding income from the state, in order to avoid taxation.
Letters of formal notice
Taxpayers gave businesses that broke the law the first warning letter, giving them fifteen days to comply. If they continue to break the law, they are given a second warning letter, with a new deadline of fifteen days. If businesses continue to break the law after the second warning, they are given another five days' credit to comply.
When all three deadlines have passed, the officers of the Tax Department will proceed to seal the premises of the businesses. The seal will be lifted when the taxpayers comply, with the issuance of a relevant certificate by the Tax Commissioner. If taxpayers continue to fail to comply, the Registrar has the right to seal the company's premises for a period not exceeding 20 days.
Immediate Compliance
However, during the safari of inspections carried out by the tax collectors, what impressed them was the immediate compliance of the first companies to which warning letters were served last month. In July, officials of the Department, when they began the inspections for the implementation of the sealing measure, found that 15 businesses out of the 30 inspected were breaking the law.
A few days ago, the tax collectors returned to these businesses, finding that they had now stopped breaking the law. In particular, they issue receipts and accept card payments. A competent source told "F" that the officers of the Department will often check the businesses, so that they do not fall into tax violations again.
We were also told that citizens cooperate perfectly with taxpayers, which strengthens their efforts to deal with tax evasion and tax avoidance.
Big debtors in the crosshairs
In the second stage, the Department will apply the measure of sealing businesses for tax debts over €20,000. A relevant list has already been prepared, which includes 500 businesses that owe taxes of more than €1 million.
In the coming weeks, these businesses will be targeted by the Department, with the aim of the state collecting the taxes owed to it. It is recalled that, in addition to the above violations, from January 1, 2027, the tax collection measure of stamping businesses will also apply to the non-submission of tax returns, VAT returns and tax and contribution withholding statements.
The Tax Department gave taxpayers one year to settle their tax obligations and file overdue tax returns.
