Portuguese Tax calculation blunder.jpg

Portuguese Tax calculation blunder


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THE PORTUGUESE tax authorities have detected a 700 million euro hole in their tax calculations for 2007.

Now the blundering Direcção-Geral dos Impostos has sent out tax requests to thousands of general tax payers demanding the 700 million euros corresponding to the first nine months of the year.

These figures represent increases of 14 per cent in deductible taxes on the same period in 2006, which in total increased a massive 88 per cent. The total amount of taxes from both companies and individuals represents around three billion euros for the period.


The amounts were published in an interim report on the activities carried out by the Tax Inspection Authority (Inspecção Tributária) where it was revealed that so far only 24 per cent or 920 million euros has gone into the state’s coffers from so-called “voluntary admission” self assessment.

In other words, many tax contributors who knew they’d been grossly undercharged kept quiet about it until the oversight was detected.

And to make matters worse, the number of voluntary admissions made by the public after their tax returns were submitted and calculated has actually fallen from 30 per cent in 2006 (711 million euros) to 24 per cent in 2007.

The report also states that fewer mistakes may have been detected and therefore less monies collected, partly because the tax authorities slackened up on their inspection activities.

Between January and September 2006 around 353 tax swoops per day were carried out on average, whereas this year the number fell to 316 checks, down 10 per cent.

According to the same report tax evasion continues to be dominated by failing to deduct Value Added Tax or IVA.

Individuals and service providers earning over 10,000 Euros per year are liable to deduct IVA at 21 per cent on their bills as well as deducting tax at source. (Retenção na Fonte).

It was in this particular area (IVA) that the lion’s share of taxes were either not declared or overlooked, totalling a massive 561 million euros or 35.4 per cent of the total black hole in the state coffers for the nine month period.

Another area where the tax authorities will be sending out inspectors to claw back cash relates to corporation or business tax. (IRC)

The government has calculated that it is still owed around 2.3 billion euros from business of the total 3 billion owed, representing a 127.7 per cent increase on 2006.

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