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€1.5bn in tax arrears are still due to the state

The inland revenue department

A whopping €1.5bn in tax arrears are due to the state, despite schemes affording late payers the opportunity to settle in installments, lawmakers heard on Monday.

The number came up during discussion of a bill amending the Assessment and Collection of Taxes Law, aimed at making it easier on the state to crack the whip on delinquent taxpayers.

The government wants the amendment passed as soon as possible, with a view to enforcing the new rules as of January 1 next year.

But stakeholders like the Bar Association and the Institute of Certified Public Accountants of Cyprus objected to a clause that would hold company directors criminally liable personally, regardless of fraud on their part.

Lawyers said this particular clause could wreak havoc on the international services sector.

A finance ministry official said the government was willing to scrub the clause from the bill for the time being, as long as it was revisited at a later date. This was to ensure that the rest of the legislation passes.

But she reminded MPs that the new government policy is to criminalise tax delinquency across the board.

The same bill provides for criminalising cheating when it comes to self-taxation and tax assessments.

The official said it was contradictory for the state to give people relief and support during the coronavirus pandemic, but on the other hand to give taxpayers the message that “it’s alright for you to pay whatever you want.”

Another point of contention was the period of time within which one would be allowed to file a revised tax return. The accountants said that, having spoken with the Tax Commissioner on this, they agreed to the filing of revised tax returns within a maximum of four years.

The finance ministry official recalled an earlier compromise setting two years as the maximum.

Representatives of the Bar Association also had reservations over a clause in the bill that would enable tax inspectors to visit premises without prior notice.

 

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