Cyprus Mail

End nears for tax cheats

Finance minister Haris Georgiades

By Elias Hazou

The government aims to turn the screws on tax delinquents this year as well as those who have escaped the taxman’s radar, finance minister Harris Georgiades told MPs on Tuesday.

The Tax Department is preparing to launch a drive to track down and tax the owners of luxury assets, such as cars and yachts, the minister said during a joint session of the House ethics and watchdog committees.

The state is concerned with two categories of tax evasion, he said. One is taxes that are levied but not paid, the other relates to taxes that should have been imposed but authorities have thus far been unable to trace the natural or legal persons as they have not filed tax returns.

State revenues from both direct and indirect taxes over the past 10 years came to €36 billion.

Nominally, there is currently some €2 billion due in outstanding taxes. Of this amount, around €0.5 billion is under appeal by taxpayers, and an additional €850 million relates to personal and corporate bankruptcies and people who are now deceased.

That leaves €650 million in uncollected taxes. The state has taken legal action for €450 million of this amount.

On taxes that should have been levied but were not, Georgiades cited the example of an owner of apartment blocks who declares his assets as a plot of land.

This phenomenon necessitates the imposition of immovable property taxes according to 2013 prices, he added. IPT is still based on 1980s prices.

In addition, a number of self-employed people and entrepreneurs were not declaring their real income, and in some cases people falsely claim to be jobless so that they collect unemployment benefits.

According to Georgiades, a special unit within the Tax Department is currently scrutinising some 300 cases of people believed to be paying only 40 per cent of the taxes they should be paying.

Meanwhile the Tax Department hopes to bring online this year a central database pooling information from the land registry, the road transport department, customs and other agencies, such as the Cyprus Agricultural Payments Organisation.

The minister said it has been observed that undeclared income is converted into assets – real estate, yachts, luxury cars, company shares or even deposits.

He recalled that interest on deposits – held both here and abroad – is subject to taxation.

There was therefore a need to check the deposits in the banking system, which amount to some €46bn.
Georgiades stressed that it is perfectly legal for persons to transfer and to accumulate money abroad, as well as to keep deposits overseas.

“It is legal to keep deposits abroad and to keep deposits in Cyprus. In Cyprus, we have billions in deposits from foreign nationals. But even where deposits are lawful, this wealth must be justified.”

To date, governments have been able to share information on foreign tax residents, but this data was limited to the interest on deposits, not the capital itself.

Georgiades said that as of January 1, 2017 new EU rules will come into effect for the automatic and mandatory exchange of information on cross-border tax rulings.

The new rules are designed to lead to greater cooperation between Member States on tax matters and act as a deterrent from using tax rulings as an instrument for tax abuse. All Member States will be equipped with the information they need to protect their tax bases and effectively target companies that try to escape paying their fair share of taxes.

Georgiades also unveiled that within the year the government would bring new legislation simplifying and improving tax procedures.

Related Posts

Island’s energy market set to open up in the autumn

Antigoni Pitta

Spokesman confirms first direct flight to Turkey taken place

Antigoni Pitta

Four sentences for workplace safety violations in Limassol in 2021

Antigoni Pitta

Coronavirus: Three deaths and 2,546 new Covid cases on Tuesday

Antigoni Pitta

Coronavirus: More than two out of ten hospital patients had at least one jab

Gina Agapiou

Traffic camera fines caught in red tape

Nick Theodoulou


Comments are closed.