Ministry of Finance will change the tactics against debtors of tax authorities. Prosecution and administrative fines will cease if the debtor agrees to sign a "contract for sincerity" with tax authorities. A seductive prize will be the payment of overdue debt with a generous discount and on more instalments. Their number will depend on taxpayer's financial state.
Treasury's plan foresees, among all, the elimination of prosecution and jail for outstanding debts to the state, which are now valid for debts exceeding 5,000 euro, as well as the possibility of their partial repayment, depending on income and property status of the debtor, or in the case of a company - depending on its turnover.
At the same time penalties for intentional tax evasion and illegal trading are becoming even more stringent, as they can reach to confiscation of property.
Treasury's plan for the new list of offences, which is expected to come into force by the beginning of next year, includes the following changes:
- Removal of individual fines for first tax violation. A separate penalty will not be imposed, which is now reaching 1,150 euro, when a tax violation is found out for the first time, regardless of its type and size, provided that it is not a deliberate tax evasion.
Among cases, where the fine will be removed, are the issuing of non-certified tax information inadvertently, the non-issuing of invoices, receipts for services, bills of lading, etc., when there is a similar document, the identification of formal violations which do not affect revenue and costs.
- Auditors will not reject accounting books and data because of formal violations and minutiae, but from 2013 the outdated Code of accounting books and data will be repealed and will be replaced by an electronic inventory of incomes and expenses.
- Up to 80% write-off of a big part of the additional tax and its repayment on instalments, as their number may reach 40 for taxpayers who will admit of "tax transgressions" from the past and will submit a new or expanded tax return.
This measure applies to taxpayers who have not filed or have filed inexact tax returns. They will have to submit primary, corrected or expanded tax returns, accepting the additional tax they must pay for past years (tax returns for income tax, VAT, profit tax, tax on transfer of real estate, inheritances, grants, etc.).
Tax division in instalments will depend on the time when the obligation has occurred, the type and amount of tax, the taxpayer's financial state and his or her tax history. For liabilities from income tax and properties, which relate to current year, instalments will be less than the debts that are overdue for a long time.
- Elimination of measures for forced collection of income, such as confiscation of income and property, as well as of the prosecution for those who contract their settlement obligations. It excludes cases of tax evasion and money laundering.
Also, if the entire tax due is paid at once, the taxpayer will be able to benefit from a discount of up to 30%.
- Especially for firms, there will be a write-off of increased taxes and fines on overdue liabilities and past violations, as well as payment of the obligations on instalments, as their number will depend on the company's financial status, its type and the size of its turnover.
The plan provides for equal periods of time (quarterly or in a period of six months) the amount of tax due instalment to be reviewed, so that it matches a percentage of gross revenues. For example, if during any month of the year the company's revenues have declined, the instalment will also be automatically reduced, and if revenues have increased, it will be reviewed again.
According to officials at the Ministry of Finance, the tax, which will be formed automatically, will vary within 3% -5% of the company's or the freelancer's gross revenues, depending on the location, the size and the type of activity.
- Elimination of prosecution and jail for overdue liabilities over 5,000 euro, as it is today.
However, in cases of intentional tax evasion (concealment of income, property, such as real estate, deposits, issuance of false and virtual invoices, etc.), there will be more severe punishments than the currently valid, as even confiscation of property is possible.
Besides prosecution and other penalties, violators will be subjected to hefty fines and increases of the tax payable, which will not be reduced even if they sign an agreement with the tax authorities.
The aim of the new plan is to increase revenues to the Treasury
A senior Treasury official said that the tendency is towards a total makeover of the existing sanctions regime for debtors, the relentless pursuit of taxpayers with threats of arrest and confiscation of property will be put to an end, which did not fill coffers, since due to the objective economic situation individuals and businesses are unable to pay their obligations.
The same official said that the big question for tax authorities is not taxpayers to be punished, but how to increase revenues in the Treasury and to prevent the budget's collapse.
The burden falls on the ceasing of "avalanche" of overdue liabilities to the state, which are increasing rapidly as a result of the crisis. This year, the total overdue liabilities amounted to 45 billion euro, marking a growth of over 2 billion euro compared to 2011.
To date, the state has raised about 800 million of overdue liabilities, while the objective of the Memorandum is the collection of 2 billion by the end of the year.
Express procedures for closing cases with debts to the state