Cyprus Mail

IRD finds tax discrepancies in funds funnelled overseas

Overseas money transfers prior to the March haircut under scrutiny

By Elias Hazou

ABOUT a dozen individuals who transferred funds out of Cyprus on the eve of the Eurogroup’s ‘haircut’ decision in March did not comply with their tax obligations, the head of the Inland Revenue Department (IRD) said yesterday.

These are the preliminary findings of checks being carried out by the IRD as it combs through some 6,000 transactions (money transfers abroad) completed just prior to the first Eurogroup and between the two Eurogroup decisions in March.

IRD director Giorgos Poufos said the department has so far traced 10 natural persons (individuals) who took money out of the country during this time period and who either filed no tax return or failed to file a statement in time.

Poufos anticipated that more similar cases would likely come to light as the IRD has only skimmed the surface.

The IRD will be taking these people to court, the official said.

The money transfers per se were not illegal, he stressed. The IRD was merely checking whether these persons complied with their tax obligations.

The restrictions on the movement of capital came into force just after the March 24 decision by euro-zone leaders to restructure the Cypriot banking sector. Prior to that, transfers were completely lawful and subject to no such limitations.

While giving no indication as to the amounts of cash concerned, Poufos said that the 10 persons identified as making these transfers were banking with (now-defunct) Laiki.

The tax period in question was the year 2011, Poufos explained, since at the time of the two Eurogroups the deadline for submission of tax returns for the year 2012 had still not expired.

The Central Bank furnished the IRD with the data on condition that the latter keeps the information in-house and does not disseminate it, due to personal data laws.

The data relates to 6,000 transfers of cash/deposits abroad by both individuals and companies.

According to Poufos, the IRD’s findings thus far suggested that the “overwhelming majority of legal persons, especially those whose transactions were carried out with Laiki, companies of both Cypriot and foreign interests, are OK as far as their tax obligations go.”

The IRD has requested additional data from the Central Bank regarding money transfers by companies who were clients of the Bank of Cyprus (BoC). Regarding individuals, because the data as provided by BoC does not differentiate between permanent residents and non-permanent residents, it was harder to identify these persons, Poufos said.

The IRD is zeroing in on the specific time frame of the two Eurogroups after noises made by MPs who demanded a list of persons and companies that siphoned their money abroad just ahead of the decision to bail-in depositors.

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