Cyprus Mail

Auditor hones in on tax cheats

Auditor-general Chrystalla Georghadji handing the 2012 report to President Anastasiades

By George Psyllides

AUDITOR-general Chrystalla Georghadji has supplied the Inland Revenue Department (IRD) with a list of doctors and lawyers whose lifestyles cannot be justified by their tax details – non existent some cases – highlighting a situation that is well known but ignored in Cyprus.

“Some do not even have a tax file,” Georghadji said on Friday, handing her 2012 report to President Nicos Anastasiades.

Random checks carried out by her department found that professionals belonging to these two groups led lifestyles that could not be justified by their tax returns – if they submitted any that is.

According to the report, the state collected some €1.4 billion in the form of taxes in 2012 with only a fraction – €81.6 million coming from self-employed professionals.

The highest amount was paid by companies, €662 million, followed by private sector workers, €356 million, and civil servants, €206 million.

Random checks carried out by the auditor-general found individuals who may be practicing the medical profession but were unknown to the income tax department.

“They do not file any returns and consequently no tax is imposed,” the report said.

Further checks at the transport department and the land registry showed that a number of said individuals had registered cars and/or immovable property in their names.

One case concerned a person, unknown to the IRD, who registered a car in their name in 2008 and in 2010 also registered real estate worth €119,602.

Another individual, also unknown to the IRD, had registered part of property whose total value was €265,000 in 2009, the report said.

The finance ministry said it had asked those individuals, and others, to file the necessary paperwork with the tax authorities.

There were also doctors who did not file their tax forms for one or more years but they were not taxed and no legal measures were taken against them.

In one case the individual who declared an income of around €28,000 per year for 2006 and 2007 had not filed a return between 2008 and 2011. In 2011, the man and his wife had registered real estate worth €530,520 in their name.

Another case concerned a couple, both doctors in Larnaca, who had failed to declare some €1.4 million in income for 2008 and 2009.

The couple had bought real estate worth hundreds of thousands between 2008 and 2011, the auditor said. The income declared in 2008 was €29,603.

The auditor also found lawyers who were “unknown” to the IRD.

“Many lawyers whose details are kept by the Nicosia district court’s accounting department, are unknown to the income tax,” the auditor’s report said.

Checks at the transport department and the land registry found that lawyers, like doctors, owned property – movable and immovable – but had never filed a tax return in some cases.

One such individual had registered real estate worth €320,000 in their name in 2010 while another bought immovable property valued at €165,000 in 2010 and a new car a year later.

In a separate case, the individual had failed to file a tax return between 2007 and 2010 but the IRD did not take any legal measures despite having information that in 2009 they had registered immovable property worth €800,000 to their name.

The finance ministry permanent secretary said the IRD has turned its attention to the sector, aided by a change in legislation that allowed the department to access the databases of other services.

“It is now clear that the law on personal data cannot be the refuge of people who try to deceive the state,” Georghadji said.

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