Insider Economy Up to €1 billion in owed taxes to be written off

Up to €1 billion in owed taxes to be written off

The island’s Department of Tax is in the process of writing off almost €1bn in outstanding tax to bring the amount owed to €1.4bn, Phileleftheros reports.

The companies whose taxes will be written off have either gone bankrupt or their owners passed away, or, for whatever reason, they are no longer on the list of the Registrar of Companies.

These are also debts incurred as a result of the 1974 Turkish invasion with estimated tax dating back to the establishment of the Republic of Cyprus. As well as outstanding sums as a result of laws that have been abolished.

Tax Commissioner Yiannis Tsangaris told state radio that there were 120 cases of transfer of Turkish Cypriot assets with a total debt amounting to €45m.

These debts have been in the department’s books for decades, and that they will never be repaid. That’s why the department has sent letters to the Committee responsible for writing off debt requesting the inclusion of these cases.

The Commissioner believes that the €1bn write off will put things in order and the real amount of taxes to be collected will be reflected.

However, based on the Department’s report on the state of play of tax liabilities for the third quarter of 2019 (July-September), which was recently sent to Parliament, a total of 178,012 taxpayers owe taxes of €2.4 billio of which  €1.8 billion are direct tax debts and €590.7 million is VAT debt.

Also, the immediately receivable amount for which no action has been taken amounts to €531.5 million. In fact, compared to the corresponding quarter of 2018, there was a slight increase as debts then stood at €2.28 billion which marks an increase of €186 million

As of September 2019, out of the €2.4 billion of debt a temporary or permanent obstacle is presented for the €1.5 billion which makes it difficult to collect.

Specifically, not a single cent will be taken by the state from 9,723 taxpayers who owe a total of €72m since they cannot be located. The majority of them have either died or are abroad.

There are also obstacles to collecting taxes of €533.8m due to taxpayers’ complaints and appeals to the Supreme Court. In addition, taxes of €523 million will not be collected because the taxpayer went bankrupt or the company is in the process of liquidation.

Another €259 million of dues seems to have a similar fate since debtors have no assets to liquidate or cannot borrow to pay off what they owe.

In addition, debts of €173.7 million, mainly from companies, will also not be collected since these are no longer on the VAT register. Meanwhile, debts of €78.5 million are under settlement and paid in instalments.

 

Read more:

https://in-cyprus.com/different-revenue-arrears-presented-by-state-services/

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