Spain to Instate Greater Tax Discipline
January 6, 2012 Taxation in Spain
MADRID – In 2012 the government of Spain will attempt to recover lost tax revenues by tackling tax evasion and conducting on-site inspections of businesses.
Speaking at a press conference following a meeting of the Cabinet of Spain on January 5th, the deputy Prime Minister of Spain Soraya Saenz de Santamaria confirmed that in 2012 the government will look to significantly cut public spending, and begin a renewed crack down on tax evasion carrying out a higher number of inspections of business places and closely scrutinizing businesses’ financial records.
The investigations conducted by tax authorities will pay particular attention to the payroll records of businesses, hoping to catch out employers paying employees in cash. Spain currently has an unemployment rate of approximately 21 percent, and tax authorities are expected to find a high number of individuals who claim to be unemployed but are taking on unrecorded work.
Soraya Saenz de Santamaria said that the ruling Spanish People’s Party expects that the new measures will lead to the recovery approximately EUR 8.17 billion previously unpaid personal income taxes and corporate income taxes.
The government will also look at reducing the size of the underground economy in Spain by instating restrictions on the use of cash in transactions exceeding a preset threshold. It is hoped that such a change will reduce the number of purchases and payments that are not recorded or taxed. Current estimates indicate that the underground economy in Spain may be worth as much as 25 percent of the official GDP.
Soraya Saenz de Santamaria also said that the government will look at reducing the country’s high budget deficit by closing a number of government owned companies. She did not reveal which entities will be closed, but said that 505 government companies are currently being considered for closure.
Photo by ppcv