Despite a 10-year campaign to get tough on tax evasion, the Portuguese tax authorities have failed to adequately collect taxes from those with obvious signs of outward wealth.
A damning report from the Inspectorate-General of Taxes (IGF) has revealed that self assessment and accountant tax returns were taken at face value while obvious signs of wealth such as private planes, luxury yachts, cars and property were often ignored when it came to assessing earnings and wealth.
In 2000, the Portuguese Parliament approved the 30-G Law which gave the tax authorities sweeping powers to investigate and define the outward signs of wealth and comparing and cross-referencing these with tax returns.
The decision had been taken following a number of high profile scandals in Portugal where obviously rich and influential public figures, such as football club owners and managers, were filing basic tax returns despite having champagne lifestyles.
In fact, during that period, boats, planes and cars often fell outside tax inspection while between 2006 and 2008 luxury boats weren’t even legally counted by the tax man.
Ten years after the law was introduced, the tax authorities have failed to get direct and current access to information that would enable them to apply it.
The report, compiled in 2009, states various times of the need to cross-reference data taken by the tax authorities and land, property and vehicle registries.
The report also highlights the problem that from January 1, 2007, tax payers were no longer forced by law to “declare obtained goods which are deemed an outward show of wealth.”
Of particular concern were often incorrect, hidden or non-declared material assets from Portuguese non-residents.
There was also a frightening lack of cooperation and correct data supplied from captains of port authorities, notaries, and property and land registration offices.
Between 2006 and 2008, one year before the report, only 544 cases were inspected and investigated and only one third of these tax payers had their taxable income corrected to the tune of just six million Euros and even then only a half of that was actually collected.
The IGF has blamed both lawmakers and bureaucracy for constraints in applying the law.
Agents at a national and district level responsible for information on taxable assets were also slammed for their “lack of integrity and reliability”, although the report stopped short of suggesting they were paid bribes to overlook the true value of material assets. C.G.