Insider Economy Tax arrears scheme used as a vehicle to avert prosecution

Tax arrears scheme used as a vehicle to avert prosecution

A number of taxpayers who owe large amounts to the Tax Department and faced legal action have managed to exploit ‘gaps’ in the law regulating tax arrears. Specifically, they have submitted applications to join the Tax Arrears Scheme, thus, prosecution was automatically averted, Tax Commissioner Yiannis Tsangaris told parliament on Monday.

By law, legal action against those who apply to join the Scheme is suspended and the Commissioner has recommended that this is amended. The law should allow the suspension of criminal proceedings only at the discretion of the Commissioner, he also said.

The revelation came to light during a debate in the House Finance Committee on new proposals regarding the existing Arrears Scheme. These were jointly proposed by opposition parties Diko and Edek.

Under the new proposals, taxpayers who participated in the existing plan and withdrew due to non-compliance with its provisions will be eligible to join it again. The Tax Commissioner said such proposals create a moral hazard for citizens not to pay.

He also said that the arrears system is computerised and does not allow a taxpayer to be included in the plan unless all old debts are settled first.

The tax arrears scheme now includes 26,689 natural and legal persons with tax liabilities of €836 million. However, due to the deductions granted by the state it will receive an amount of €679 million, according to information submitted Parliament.

In addition, 4,336 settlement cases have been suspended because taxpayers stopped paying the instalments they had agreed to.


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