Accumulation of delayed tax revenues of more than €2 billion was detected by the Audit Service, during its audit of the Tax Department for 2021
Of these, according to the report, for 2021, the total amount of overdue direct taxes, without interest, amounted to €1,104.13m, reduced by 10% compared to 2020, while an amount of €623.39m refers to interest and late fees. According to the Tax Department, of the total amount of direct tax arrears on 31.12.2021, an amount of €668 million or 38.7% is considered unsafe.
The Audit Service recommended that the Department utilize all the tools at his disposal to limit uncollected taxes.
In summary, the Audit Service states in its report that it identified an accumulation of delayed revenues of millions of euros due, mainly, to non-timely and ineffective utilization of the tools available to the Department, non-submission of income declarations by natural and legal persons for a number of tax years and non- imposition of taxes by the Department based on the judgment of the Treasurer, resulting in the loss of State revenue.
In addition, there was a delay in the examination and issuance of taxes, weaknesses in identifying undeclared income from taxpayers and/or identifying new cases of persons subject to a tax obligation, but unknown to the Department and in addition, in case of non-compliance of taxpayers with the provisions of the law , the Department seems not to take the necessary measures in all cases.
In particular, the Audit Service also identified that there are 13,000 accumulated taxes under objection, concerning a total amount of tax of €334 million, an amount which is not considered collectable by the Department until the examination of the objections. EY recommended that an effort be made to examine the old objections, as soon as possible, and that the new objections be examined without delay.
In addition, natural and legal persons do not submit income declarations for a number of tax years and no taxation is imposed by the Department, based on the judgment of the Treasurer, within the prescribed time frame, as provided by the relevant legislation, resulting in the loss of State revenue. EY recommended that the Tax Department request the submission of income declarations for all years and impose relevant taxes and penalties, in accordance with the law.
With regard to taxpayers who do not declare all of their income or declare part of it, resulting in a significant loss of revenue from the State, EY recommended the tax investigation of the specific cases, including the examination of the capital situation and the imposition of taxes, in accordance with the law.
For the delay in the examination and issuance of taxes by the Department with the risk of loss of public revenue, the Auditor General recommends that the relevant taxes be imposed in a timely manner and at least within the six-year period provided for by the relevant legislation.
The Audit Service also noted that the Tax Department does not compare or utilize information from the Department's systems or information from other Government Departments. On the subject, the Audit Service made a special report, with which it recommended that the Department makes appropriate use of both the Department's computerized systems, as well as the information provided by other government Departments and imposes relevant taxes, where appropriate, in accordance with the legislation.
Natural persons who pay social security contributions on taxable incomes (e.g. over €50,000) were also identified, but do not have an income tax file. The Audit Service recommended that the Department investigate all cases for which, while income for Social Insurance purposes was identified that falls under the obligation to submit an income declaration, no tax file was identified and, where necessary, to impose taxes.
For the non-submission of income tax returns by natural or legal persons with the activity code “Accountants/Auditors” and their non-compliance with the legislation, EY recommended that the Department investigate all cases in which they do not submit income returns or a significant period of time has passed from the deadline for submitting an income tax return and, where necessary, to impose taxes and apply the provisions of the relevant legislation.
In addition, cases were identified of companies carrying out transactions with related persons, with the possibility of non-compliance with the provisions of the relevant legislation, with EY recommending the investigation of such transactions and the application of the law that provides for the taxation of notional benefit/profit when the transactions do not are carried out at “market prices”.
The Audit Service still identified the absence of a regular reconciliation mechanism of the Integrated Administrative and Financial Information System (FIMAS), with the individual computerized systems and other sources of information, from the accounting department of the Tax Department , as a result of which the completeness and correctness of the Department's collections cannot be confirmed.
EY also made a special report on refunds and internal offsets of large amounts of VAT, without carrying out on-site checks. In this regard, it was recommended that the Department intensify on-site visits, in cases of taxpayers with significant requests for VAT refund/offsetting, in combination with other types of audits and within the time frame provided for in the legislation, to ensure public revenues.
Errors, omissions and significant deviations were also identified during the implementation of the State Sponsorship Scheme for Businesses and Self-Employed persons subject to VAT, resulting in non-beneficiaries receiving state aid. EY recommends that all the cases in which sponsorship was paid be reviewed and that the illegal state aid be recovered.
Regarding the late payment of GeSY contributions to the Health Insurance Fund, EY recommended that the necessary measures be taken for timely payment of the NHS contributions to the Health Insurance Fund.
Furthermore, a large number of companies with tax debts exceeding €211 million were deleted from the Registry of the Registrar of Companies and Intellectual Property, making them unsafe.
Overall, the Audit Service reports that the audit at the Tax Department found that in some cases, there are “weaknesses in terms of compliance with the relevant legislation and Regulations and the management of its available resources in an economic, efficient and effective manner ».