3rd August 2023
Last time out we placed the spotlight on double taxation and the latest bilateral treaty developments. Our newest article brings you the latest roundup from around the world on all matters relating to tax fraud. As you’ll discover, the central topic remains the ongoing fight to clamp down on those facilitating tax evasion and avoidance schemes, as local tax authorities continue to make sizeable gains as they recoup ever more lost tax revenue. For recruitment and employment agencies placing contractors abroad, the need to be compliant remains a topmost necessity.
Our first story actually looks at the ongoing alleged tax improprieties of one of the world’s biggest pop stars. The tax issues for Shakira, dubbed the ‘Queen of Latin Music’, don’t seem to be going away, with the Colombian singing sensation now set to face a second tax investigation in Spain. Already allegedly owing €14.5m on income earned between 2012 and 2014, the 46-year-old is set to face trial on this first set of charges despite repeatedly denying all wrongdoing. She has in the past called these “false accusations”. Two more cases post-2018 are now being looked into.
Both cases are being handled by the municipality of Esplugues de Llobregat. The matter centres around her place of residence with authorities arguing she spent most of her time in Spain despite her official residence being in the Bahamas. According to her PR firm, Llorente y Cuenca, Shakira is “now focused on her artistic career in Miami and is calm and confident that she will receive a favourable resolution of her fiscal issues”. Soccer stars Lionel Messi and Cristiano Ronaldo have also previously been investigated by Spanish authorities for tax evasion.
Tax evasion continues to be big problem in Greece with the latest estimates suggesting that it could be costing the government in the region of €8-10bn. In an interview with local radio station Skai, Haris ‘Harry’ Theocaris, the Greek Deputy Minister of the National Economy and Finance, said that around half of that total could be recovered and that new measures would be introduced later in 2023. These would significantly boost tax revenues, which would enable the Greek government to meet its spending expenditure targets for key public sector services such as healthcare and education.
Theocharis went on to explain the key areas of focus. He said, “The plan to combat tax evasion has a number of pillars. The first is the increase in the use of new electronic payment methods, for example, the interconnection of POS and cash registers, the timetable of which we will compress to a degree that it will come in early 2024. Also, electronic invoicing and other things that we hear about – it is about time we implemented them.” Audits and data will also play a big part in the steps being taken to improve the structure of the Greek tax system to tighten controls on tax evasion and fraud.
Tax compliance a must for recruiters
On a more positive note, the ANSA news agency reports that Italy’s tax authorities achieved an unprecedented level of success in 2022, collecting a staggering €20bn in tax revenue. So significant was the amount in question that it prompted the Director of the Inland Revenue Agency, Ernesto Maria Ruffini to call it “the most important result ever” in the country’s history. Speaking at the ‘Let’s make Italy Simple’ conference, Ruffini said that of that amount €9.2bn resulted from measures to fight tax fraud while €3.2bn was paid after letters were sent to non-compliant taxpayers.
Yet more good news for tax agencies! A recent report by the Africa Initiative revealed that a number of African countries also managed to claw back $1.9bn in lost revenue. This is some achievement if you consider that the continent loses some $60bn in illicit financial flows, according to Organisation for Economic Cooperation and Development (OECD) figures. These results are widely credited to the tax transparency and exchange of information standards that have been implemented by African countries to help stamp out tax evasion and are in turn generating important extra revenues.
In other news, Dutch tax adviser Frank Butselaar, who represented globally renowned DJs such as Afrojack and Tiësto among other high-profile TV and media celebrities, has been indicted by the US’s Internal Revenue Service (IRS). The 63-year-old Dutchman stands accused of facilitating a $100m tax evasion scheme over a period of more than seven years to foil US authorities. The charges levelled at him include conspiracy to defraud the US government and the filing of false tax returns, having sought to illicitly conceal millions of dollars when his clients were US tax residents.
IRS Special Agent Thomas Fattorusso said, “B. thought he was above the law. This was not a ‘get rich quick’ scheme, but he used some sophisticated techniques to maintain this tax scam over several years.” He went on to add, “As a tax advisor to many wealthy clients, B. knew that his clients were obligated to pay US taxes on their income, but he ignored that obligation and chose to fraudulently hide that income from the IRS.” Butselaar, who had been arrested in Italy earlier in 2023 and following a court ruling was subsequently extradited to the US, could face jail if found guilty.
An interesting mix of stories that once again highlight the progress being made by global tax authorities to counter the scourge of tax fraud and tax evasion. Clearly, recruitment agencies placing contractors must carry out all due diligence to ensure that all tax compliance checks are taken. The penalties can be severe. Should you need any advice, please speak to our 6CATSPRO specialists.
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