Tax inspectors propose the “civil death” of fraudsters to prevent them from accessing subsidies


The Association of State Tax Inspectors has presented this Thursday a battery of proposals to reduce tax fraud in Spain. Among the measures proposed stands out the “civil death” for tax fraudsters to prevent them from accessing subsidies or public procurement. This would apply to the most serious or organized cases. The report has been presented in Vigo where the organization that includes the inspectors is holding its annual congress. The document indicates that this “civil death” would be decreed for shell companies, front men or convicted of infractions from a certain amount that would be marked by law.


The Budgets still foresee 42,000 million in tax deductions that the Government has promised to reduce

The Budgets still foresee 42,000 million in tax deductions that the Government has promised to reduce

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This civil death would mean that these fraudsters could not access public subsidies or contract with the administration. Neither could they issue invoices when they had the NIF revoked. Revoking this identification would also close the door to financial operations, nor could they go to public records (except civil).

To this status for the biggest fraudsters, the IHE also proposes to create two new tax crimes. The first, in line with OECD recommendations, would be to attack the wealth accumulated by people whose known activities or their declared income do not justify their assets. It would be known as “unjustifiable possession of property or rights.” The second would classify the conduct of offering services and instruments to commit the tax crime, since, in most cases, they are necessary for the commission, because the perpetrators of a tax crime do not usually have such exhaustive knowledge of this matter so they need help and guidance.

The president of the association, Ransés Pérez Bogas, explained that these proposals should also be accompanied by a structural reform of the Tax Agency. The document states that it should be granted new powers and capacities to investigate possible tax crimes. To this is added, according to the representative of the inspectors, a path towards greater “efficiency” of the Agency, encouraging the inspectors to specialize by sectors and without territorial limitations, acting at the national level.

The battery of measures proposed by the agency goes further and would affect the review of certain tax figures where there are considerable levels of fraud. One of these points would be the review of tax benefits, just as organizations such as the Independent Authority of Tax Authority have requested. “Cost-benefit criteria should be introduced when evaluating the most relevant, making public opinion the levels of effectiveness and efficiency of these,” says the document. In addition, any new benefits included should have this cost-benefit report.

Among the main figures to be reviewed by the administration, the document points to personal income tax. Specifically, it points to an improvement in the concept of tax residence to “prevent taxpayers with a strong connection with the Spanish territory from avoiding the payment of this tax by achieving tax residence in others, normally classified as tax havens or low taxation, with some less demanding requirements to grant tax residence “. It considers that the current norm contains “ambiguity” that allows establishing ways to avoid taxes.

Regarding VAT, where inspectors see “high fraud, the document presented this Thursday suggests limiting the mechanisms that allow the deduction of fees, especially in economic sectors where more cases of fraud are taking place. Likewise, it raises greater control over the tax. special on hydrocarbons where, “once the fraud is committed they are difficult to prosecute and impossible to collect.”

The document also focuses on the “drift” of tax fraud towards the mechanism known as asset lifting. He assures that this “typical fraud” figure is “difficult to pursue and consumes many -human- resources of the Tax Administration.” Among other issues, in the case of companies, they propose to hold any company responsible for a group of these crimes committed by another of the companies that compose it. What’s more. they propose that professional firms that are “the true ideologues” of these structures be persecuted. Also to financial entities specialized in the placement and transfer of funds and in the creation of financial products that fulfill the same functions of tax avoidance and evasion. Finally, they consider it necessary to apply changes in commercial regulations to complicate the creation of these corporate structures created to reduce the tax bill of a company.

The association includes a proposal to reduce the minimum level to enter the list of defaulters. To date it was one million euros, although in the reform of the anti-fraud law this year it has been reduced to 600,000. The IHE defends that it be reduced to 300,000 euros. “The social impact of unpaid debts does not come from a handful of large debts, but from millions of debts of high, medium and small amounts,” he justifies.

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