Inland Revenue is looking at around 80,000 companies who have asked to be removed from Cyprus’ list of registered companies as many of them may still owe unpaid taxes, MPs heard on Monday.
According to figures cited in the US State Department’s annual report on money laundering released earlier this month, the total number of companies in Cyprus declined from 272,157 in 2013 to 216,239 at the end of 2018 as authorities stepped up enforcement with registration rules, including the annual submission of accounting reports. Closures of old companies also contributed to the decline even though more than 10,000 new companies have been registered every year since 2013, the report said.
During a general ongoing discussion on ways to improve tax compliance and collection at the House finance committee on Monday, Tax Commissioner Yiannis Tsangaris urged MPs to help Inland Revenue enhance its capabilities to combat tax evasion and increase revenues.
Tsangaris cited a visit to an accountancy firm who, he said produced a list of 60-70 companies, all registered in 2012, “with whom they claimed to have lost contact”.
His department has been in dispute with the Institute of Certified Public Accountants of Cyprus (ICPAC) about how far the powers of Inland Revenue should stretch. One of the issues in the dispute concerns the period of submission of revised tax returns, which was already extended from 12 to 18 months by the finance ministry, while accountants want this to be 72 months, or six years, MPs were told.
The other disagreement between the two centres on the provisions of criminal liability for non-payment of tax.
ICPAC chief Kyriakos Iordanou told deputies the institute had no objection to strengthening tax compliance but “in the right way without leading suffocating the economy”.
The discussions are set to continue.