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Public Servant with over 1 million in the bank without declaring it

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Δημoσιος Υπλ&lambda ;ηλος με πàνω απò 1 εκατ. στην τρàπε ζα χωρiς να τα δηλoσει

Referred to the Attorney General

Non-submission of income declarations by natural and legal persons for a number of tax years, non-submission of tax declarations by accountants, auditors, lawyers and doctors, deletion from the Register of the Registrar of Companies and Intellectual Property of a large number of companies with tax debts resulting in them becoming unsafe, are some of the references contained in the Special Report of the Audit Service for the Department of Taxation for the year 2021, which was presented on Thursday by the Auditor General of the Republic of Cyprus, Odysseas Michaelidis, before the Parliamentary Committee for Monitoring Development Plans and Control of Public Expenditures.

The Auditor General stated within the Commission, among other things, that during the time under review no income declarations were submitted by natural and legal persons for a number of tax years and therefore no taxes were levied by the Tax Department resulting in a loss of revenue for the state. He also noted that a large number of companies with tax debts have been deleted from the Register of the Registrar of Companies and Intellectual Property, making them unsafe.

Odysseas Michaelidis was also mentioned in a case, concerning an anonymous complaint, which was received and examined by the Audit Service, where it became clear that in various accounts of a certain taxpayer, who worked in the wider public sector, there was a sum of money of 1.15 million euros which appears to have been well over his payroll and not reported to the Tax Department.

Δημoσιος Υπλη λος με πàνω απo 1 εκατ ; χωρiς να τα δηλoσει

Mr. Michaelidis added that the specific case was referred to the Attorney General for a relevant investigation regarding abuse of power and other criminal offenses since it involved a person in a position of authority. After investigating the case, the taxpayer in question agreed to pay taxes, plus a 10% penalty, on an additional income of 707,000 euros for the purpose of compromising the offence.

As the KYPE reports, the Auditor General stated that according to data from the Tax Department, tax refunds (including offsets) for 2021 amounted to 432.52 million euros, of which an amount of 374.05 million euros it concerned indirect taxation and 58.47 million euros in direct taxation.

He also noted that in the context of the financial audit of the Department for the year 2021 and for the purposes of checking timely collection as well as checking compliance with the relevant legislation and Regulations, 120 taxpayers (natural and legal persons) were selected by random sampling, concerning both direct and and in indirect taxation. As he explained, the relevant investigation found, among other things, that some taxpayers have not submitted or have submitted their income statements and/or employer statements late.

He also added that several cases of taxpayers declaring different turnover for income tax purposes and for VAT purposes were identified, with a difference of more than 15%. He further said that in various cases of taxpayers, the turnover declared in VAT for certain years, was significantly higher than the turnover declared for income tax purposes, or even no returns were submitted for income tax purposes.

Mr. Michaelidis referred to specific examples of cases published in his Report. He indicated that a company, according to data received from the Tax Department, submitted VAT returns for the year 2017 with a total turnover for the year of 20.4 million euros, while the turnover declared for income tax purposes amounts to 4, 3 million euros.

A particular sensation was caused by the revelation by the Auditor General that according to data in the tax file of a company, worth over one billion euros, it appears that the Tax Department repeatedly made refunds of significant amounts of VAT to the company, without conducting an on-site audit, which resulted from the submission of the VAT tax returns.

As stated from the data in the tax file, it appears that the last audit visit by the Department was carried out on 4.2.2014, while it appears that additional audit visits were made on 28.1.2019 and 8.7. 2022, regarding only the purchase of works of art and antiquities.

From the file, Mr. Michaelidis continued, it also appears that the Tax Department carried out limited audits where reconciliations of the company's books were mainly carried out with the amounts declared in the tax returns.

According to a note from the Office of Large Taxpayers dated 12.10.2022, in the year 2021 a tax of 10.4 million was refunded to the company in question, while the total VAT refunds in the years 2016-2021, according to the Department's computerized system, for the same company amounted to 52 million euros.

At the same time, Mr. Michaelidis said that the Tax Department proceeded with a tax refund of 368,776 euros to this company for the purchase of works of art and antiquities, which were placed in the owner's offices, following an objection submitted by the company in question to the Tax Department. The Auditor General noted that the relevant decision of the Tax Commissioner is not justified as the person in question is a collector of works of art, and that some of the works he states will be used in his offices are located in his residences and elsewhere.

Responding to the position of the Auditor General, the Commissioner of Taxation, Sotiris Markidis, stated that the issue in question should be handled differently, as it concerns persons who have a turnover of billions of euros and need to equip their offices.

He stated that the Tax Department will also carry out repeated audits in cases where there is a questioning of the VAT refund, pointing out that something like this is also happening in this particular case.

Mr. Markidis in his statement also referred to the needs that exist on the part of the Department of Taxation indicating that the Department is understaffed, requesting the acceleration of the procedures from the competent bodies.

Placements of MPs

After the end of the Committee, the Deputy Chairman of the Committee, Member of Parliament of DIKO, Chrysis Pantelidis, expressed his satisfaction for the excellent cooperation of the Tax Department with the Audit Service and also expressed his satisfaction for the fact that the findings of the audit are tools for solving problems and improving the procedures and mechanisms of the Tax Department.

Mr. Pantelidis stated that “as DIKO we support the Taxation Department in its mission” noting that the state's ability to calculate and collect the various taxes in a fair and correct manner ensures the economic viability of the State, guarantees conditions for the development of entrepreneurship and reinforces society's sense of justice.

“We are always willing” said Mr. Pantelidis for any improvement in the legislation with the aim of serving the public interest as well as the fair and equal treatment of all citizens and all businesses.

DISY Member of Parliament, Savia Orfanidou, stated that during the discussion some examples were mentioned by the Auditor General in which it is clear that the required control was not carried out or that there should be a further control.

However, Ms. Orfanidou continued, it is a general finding of the Auditor General himself and also through the mouth of the Tax Commissioner, that in the last 10 years, with the consolidation of the tax departments, with the reforms that were promoted, especially in computerized systems, and with the legislations that have been approved, the required controls, procedures and related systems have clearly improved.

Ms. Orfanidou also said that based on the results of recent years and based on the collections of Department of Taxation, there is a very serious improvement and increase in the tax collection capacity of the Department.

Therefore, he said, as DISY, “we want the Department to continue on this right path as there are still plans that need to be implemented as well as procedures for the recruitment of further staff and the appointment of the three Assistant Tax Commissioners, which will strengthen and they will strengthen the Department even more”.

As the KYPE reports, after the end of the Committee, Mrs. Charalambidou noted that she herself will not read the Auditor General's report again if she does not have in her hands a second document with full information, especially when referring to companies, for which the issue of personal data will not arise.

He also stated that he is very surprised to be informed that while the registry of shell companies has been prepared there is a percentage of 1-2% that are pending, as they have not declared the final beneficiaries, pointing out that the worst is that there are no consequences for these companies.

He also added that there is also an issue with government buildings which are contracted to private individuals and the Tax Commissioner should have a register to know if those who collect rent declare it and pay tax. She stated that in her question about this matter to the Tax Commissioner, he replied that there is no such register at the moment, while he assured that it will be prepared.

Ms. Charalambidou stated that she is satisfied that he was informed that the people became familiar with the use of TAXISnet.

Furthermore, he emphasized that during the pandemic period, sponsorships were given to companies that they were not entitled to receive and he said that he received the answer from the Tax Commissioner that the matter is happening managed by the Ministry of Finance. Mrs. Charalambidou said that a letter will be sent to the Ministry of Finance on this matter.

Finally, she emphasized that when officials come to the Committees, regardless of whether they have instructions from the Ministers or the political superiors, they must face the Parliament and submitting information that they do in all honesty, without omitting or hiding any information.

Source: 24h.com.cy

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