FURTHER details are coming to light of the 2014 report by the Cyprus Auditor General, Odysseas Michaelides, which was handed to President Nicos Anastasiades on Monday. The report has created a storm through the bleak picture it has painted of corruption in the Land Registry and poor collection of taxes.
The research into occupational groups revealed tax evasion among the medical and legal professions, with many not even being registered for tax purposes.
One example was a doctor in Nicosia who reported total income of €358,533 for the period 2006-2009. Yet during the same period the taxpayer spent €652,059 (or €757,059 based on Land Registry records) for the purchase and renovation of real estate.
Another example was a lawyer in Larnaca who filed no tax returns for the years 2007 to 2010. The taxation services did not take prompt legal action against him, yet according to other records the taxpayer purchased property worth €800,000.
Under-taxation
The tax department was also found to have under-charged in a number of cases. For example, government revenue was lost owing to the way in which a company that owned of 12 plots in Ayia Napa was taxed.
The value of the 11 properties assessed in 2002 on the basis of values in 1980 amounted to €4,102,345 (€4.1m). However, for the years 2002-2012, the Department imposed taxes on real property at a value of only €546,325, resulting in estimated loss of about €168,000 to the government.
Another company registered its name as the owner of a field in Paralimni that turned out to be a building. The value was estimated in 2011 and at 1980 prices at €1,623,171. The Tax Department imposed property tax only for the years 2012-14, and appears not to have imposed taxes for the years 2002-11. This resulted in a €51,000 tax loss for the government.
A registered owner of three properties in Kaimakli valued at €407,875 was not taxed at all in 2013-14, while for the years 2008-12 it was taxed at a discounted value of €371,738.
There were also cases in which there was a big increase in valuation for tax purposes from 201 – the year in which new tax rates came into force and new valuations were made.
A company that owned a hotel complex and tourist apartments in Protaras was taxed in 2013 on the basis of a valuation of €3,622,235, whereas the previous year the company was taxed on the basis of a valuation of €387,243.
Another company was taxed in 2013 on property valued at €1,710,000 at whereas in 2012 it had been valued at €189,655.
The Auditor General a found that 30 legal entities engaged in land development owed €14.7m in interest and charges as of February 2015. Of this total, €11.1m (75.6%) concerned due taxes for the years 2013 and 2014.
Total overdue taxes reached increased by €11.38 million to €733.37m in 2014, from €721.99m in the previous year. Overdue interest on tax payable amounted to €421.30m, bringing the total arrears to €1,154.67m (€1.2 billion).
Around 40%, or €461.78m of the arrears are considered “uncollectable”.
After telling our neighbour to remove a dog cage complete with lovely open sewer pipe we were suddenly visited by the municipality who informed us our neighbour owned part of the garden we had owned for 18 years and was original to the building.
When we went to the Land Registry to dispute the claim the official set of plans for our building were missing, the rest of the block are all present and correct though! Rather than put a stop to the land grab and destruction of our property whilst they investigate the official response has been to allow it based on a set of plans that are held by one of the disputing parties!
Now not implying anything but our neighbour’s father was high up in the land registry and the police officer that told us he would arrest us if we stopped the builders was her cousin – Nepotism, surely not!?
This is what happens when you have uneducated persons working in the government offices which must I say got their jobs through family connections and there you go favours and money under the table most likely going on!
Not long ago I went to the tax office and I couldn’t believe the lack of unprofessionalism, they couldn’t cope with the work load regarding ipt taxes and I’m 100% certain they have made a mess of it.
Thank you Ed. and Peter. So they do know who they are, these people who appear to be, for one reason or another – untouchable.
@ Deanna,
There is an old saying in Credit Management. “An old debt is a bad debt”. And that applies everywhere, even to blue chip companies. People accept paying their dues, but when you’re chased for a debt you still owe after 24-36 months old, well at the very least you expect a discount.
Collect debts as soon as they fall due, no grace, no extension of time. In Cyprus too much water passes under the bridge, and of course the debtor is also my second cousin brother which never helps.
In many cases when the debts have become to big to service it’s time to move the assets out of the reach of the creditors, and time allows this to happen.
“Around 40%, or €461.78m of the arrears are considered “uncollectableâ€Â.”
Why?
(Editor’s comment: Who knows? Maybe the debtors are bankrupt or have fled the island.)
Wow ! I can hardly believe it, corruption in Cyprus, who would have thought this would be happening here. OK, now let’s see if the courts actually do something about this or will it seem to get swept under the carpet and just expect more money from being in the euro zone to help out. This place is being spoilt by rogues and thieves but nobody seems to have the bottle to make these people pay dearly for their corruption. Sad sad time for this once friendly and trusted island, but not any more!
At least some of the various scams are being made public but I’d bet my boots that for every one we hear about there are five or more we don’t.
Well I never. Corruption by land registry officials and the legal profession. It can’t be true. The Auditor General has done a great job by bringing this to the front. If he doesn’t get the backing from the courts then it will all get brushed under the carpet as usual.