New government legislation grants the director of Inland Revenue (DIRD) extensive powers, including the seizure of tax debtors’ bank accounts and assets as well as prohibiting the sale of real estate while a person is in arrears.
The bill amended the tax law of 1962 and has been submitted to parliament, which needs to be approved as it is a precondition for the receipt of the next bailout tranche for Cyprus.
Under its provisions, the DIRID is empowered, having first secured a written consent from the Attorney-general, to request banks to freeze an amount in the holder’s account corresponding to what the person owes in taxes, including interest and late penalty fees. The frozen amount will be transferred to the tax authorities. Individuals will have the right to appeal this action, in which case the IRD director will decide on the appeal within 15 days. Alternatively, an individual may release their frozen funds via court.
The IRD, which has been merged with the VAT authorities, will also be able to order the confiscation of a person’s movable property, without going through court, although a taxpayer may still legally challenge the seizure.
WANT TO BUILD A FINANCIAL EMPIRE?
Subscribe to the Global Banking & Finance Review Newsletter for FREE Get Access to Exclusive Reports to Save Time & Money
By using this form you agree with the storage and handling of your data by this website. We Will Not Spam, Rent, or Sell Your Information.
Currently, the court may, following the IRD’s appeal, assemble tax debtors, investigate their financial situation and possessions and order them to pay the amount in arrears. In the case that debtors disregard the court order, the court has the right to order seizure and sale of their movable property (cars, furniture, etc).
With the new law, the DIRD may even place a lien on a taxpayer’s bank account without a court order, which is rather significant step towards actual collection of the tax due.
The Department of Lands and Surveys following the order of the DIRD may place a lien on a person’s property as security for owed taxes. Once this occurs, the owner cannot sell or transfer the property until the tax debt is settled. In this case the property may be seized and sold to recover the amount due.
Aim of the bill is to strengthen powers by the tax authorities to ensure payment of outstanding tax obligations.
Around €605 million in overdue taxes was owed to the state in 2012, with over half concerning unpaid income tax.