Cyprus Mail

Taxman on brink of busting huge evasion network, he says

The tax office

By George Psyllides

The tax department is on the brink of busting one of the biggest VAT dodging network on the island dealing with intra-community trade, Tax Commissioner Yiannis Tsangaris told the House watchdog committee on Thursday.

The commissioner said VAT in its current form was one of the easiest taxes in the EU to evade and become a multimillionaire, urging authorities to amend the law in Cyprus before the end of the year so that better checks could be put in place.

Tsangaris said Cyprus was the only country that did not change the legislation because “we did not believe a small island would be chosen by the crooks.”

He said the department was on the brink of locating one of the biggest tax evasion networks in Cyprus that concerned transactions within the EU. He declined to provide any more details on the matter.

Discussing the auditor-general’s report on his department, Tsangaris said they had huge and urgent obligations towards the Organisation for Economic Co-operation and Development (OECD) relating to Cyprus’ tax reputation.

He said the department suffered from big staff shortages, which hindered its day-to-day operations but also the bigger obligations towards the OECD.

Cyprus was under constant monitoring and if it fails to cope it will remain on reports as having failed to respond on transparency issues.

The island has been struggling to get off the blacklist it entered in 2014, which precludes it from sharing information with other EU countries.

A delegation from the Global Forum on Transparency and Exchange of Information for Tax Purposes will be in Cyprus in February for a review and Tsangaris expressed hope the island will pass.

The Global Forum consists of OECD countries and other jurisdictions that agreed to implement tax related transparency and information exchange.

Cyprus has also undergone a review from US authorities who still do not trust the country to exchange information until the system becomes more reliable.

Tsangaris said 80,000 companies have applied to be stricken off but couldn’t because they had never filed a tax return.

The department wants the law amended to prohibit companies from opening a bank account if they have not secured its permission.

The department had around 3,500 reports which were impossible to handle due to personnel shortages. MPs heard it only had five employees for the whole of Nicosia and the current legislation did not help much.

Amendments to the VAT law have been made and they were now working on the income tax legislation to make it more effective.

Auditor-general Odysseas Michaelides said progress had been made but there were still a lot of things to be done, mainly relating to processing information. Michaelides said many businesses declared one thing to VAT and another to the income tax without the department being able to crosscheck.

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