State losing millions through tax evasion

THE PORTUGUESE State is losing millions of euros every year because of fiscal fraud and tax evasion, according to the Ministry of Finance.

The non-payment of taxes represents between four and seven per cent of the Gross National Product and has forced the government to present parliament with a set of measures to close the loopholes and tighten up on individuals and companies avoiding their financial responsibilities.Accounts carried out revealed that, at the end of 2004, between 5,400 million euros and 9,450 million euros slipped through the Inland Revenue’s hands. Had the total amount been paid, it would have avoided, in part, the tax increases that the government has had to introduce on IVA (VAT).

The national budget deficit is expected to stand at 6.83 per cent for 2004, well above the three per cent limit prescribed by the European Union Commission’s Financial Stability Pact Regulations. Brussels has issued a strong warning that Portugal must put its financial house in order or face punitive consequences, while the Inland Revenue is tightening up on small businesses and independent workers through a system of cross checks and references with other State and private agencies.

Bank secrecy laws, which have until now prevented the government from snooping into bank accounts except in extraordinary circumstances, is likely to end, with banks legally obliged to report to the tax man receipts and balances over and above an allowed sum.

The Portuguese State is also likely to speed up the judicial process linked with fiscal evasion and crime, especially with regards to debts to the State and public authorities.