A number of loopholes and weaknesses in how rules are enforced have resulted in the delay of millions of euros in taxes being collected, according to a report released this week by the state’s Audit Service.

The service conducted an audit on a sample of collection and payment transactions by the Tax Department. The sample was selected using a specific methodology, in the context of an audit aimed at formulating an official opinion on the financial statements of the Republic of Cyprus. In addition, a compliance check was also carried out.

According to the report, the total of overdue direct and indirect taxes as of December 31, 2020, including interest and charges amounts to €2.34 billion (€2.21 billion on December 31, 2019), of which an amount of €1.83 billion (€1.62 billion in 2019) refers to direct taxes.

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Uncollected taxes in Cyprus estimated at €2 billion

By Kyriacos NicolaouAugust 30, 20229 Comments1171

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A number of loopholes and weaknesses in how rules are enforced have resulted in the delay of millions of euros in taxes being collected, according to a report released this week by the state’s Audit Service.

The service conducted an audit on a sample of collection and payment transactions by the Tax Department. The sample was selected using a specific methodology, in the context of an audit aimed at formulating an official opinion on the financial statements of the Republic of Cyprus. In addition, a compliance check was also carried out.

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According to the report, the total of overdue direct and indirect taxes as of December 31, 2020, including interest and charges amounts to €2.34 billion (€2.21 billion on December 31, 2019), of which an amount of €1.83 billion (€1.62 billion in 2019) refers to direct taxes.

Moreover, an amount of €510.57 million (€594.3 million in 2019) refers to indirect taxes, including VAT. These amounts have not yet been confirmed by the Audit Service.

In relation to the above, the report states that, according to the debt management office, as well as the Tax Department’s prosecution unit, between November 2014 and December 2020, the department registered a lien on immovable property for debts totalling €593.1 million but collected €319 million in total.

Also, between April 2015 and December 2020, the department committed €4.18 million in bank account savings for unpaid taxes, preventing this amount from being withdrawn or otherwise used by the account owner, and collected €1.39 million in total.

The Audit Service castigated the department for the low amount in committed savings, noting that it reflects the Tax Department’s “complete inability and/or lack of will to utilise a tool provided to it by the state”.