In a bid to tighten up on tax evasion, the Portuguese government has ordered all banks to send credit and Multibanco card transactions to the Portuguese tax authorities.
From now on, the Finanças will receive card movements from restaurants, shops, hotels and other commercial outlets.
In other words, the tax man will be able to check up on all payments made from Automatic Payment Terminals (TPAs) whatever the value of the transaction.
According to an official source within the tax office, banks will have to forward lists of all card transactions to the authorities, without identifying the tax payers (consumers) making those purchases.
It will give the State a better idea of the turnover and profits made by different commercial establishments, some of which in the past have submitted tax returns falsely claiming reduced profits or even losses.
Under the new law, the Government is reinforcing powers already enshrined in Article 63 of the General Tax Law (LGT), which obliges banks to “supply the tax administration by the end of July each year, with the value of payment flows using credit and debit cards carried out by intermediaries, for passive subjects that must declare income in IRS Category B income tax (individual business people and IRC (companies).”
The measure is particularly designed to tighten up tax dodging in areas traditionally prone to evasion, like restaurants. It was introduced in the Strategic Plan to Fight Fraud and Tax Evasion 2012/2014.
However, the Government stresses that since the details of the card holders remain secret, the authorities are not contravening Portuguese Data Protection Commission rules which safeguard the identity of those making card payments.
All economic operators with a business turnover of €125,000 a year must also now have specific tax authority certified software.
All commercial traders with a business turnover of less than €125,000 are also required to have registers with the NIF (Tax Identification Number) of the business including the date, time and amount of the transaction.
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