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Unexpected windfalls to incur 33% tax

Unexpected windfalls to incur 33% tax

Taxpayers who cannot justify increases in wealth will have to pay 33% tax on their additional gains, according to a special circular issued on Monday by Alternate General Secretary for Public Revenues, Ioannis Bakas.

The circular instructs tax officers that they will have to ask for sufficient justification for any wealth increases that are flagged as suspicious during checks of taxpayers’ bank accounts, as there may be cases of deposits or withdrawals which do not necessarily concern taxable income.

Bakas urged tax officers to be particularly cautious in avoiding double taxation from the transfer between accounts of cash that was re-deposited after being withdrawn due to the imposition of the capital controls in the summer.

The tax legislation dictates that any increase in wealth coming from an illegal or unjustified or unknown source will be treated as profit from a business activity and will be taxed as such after the audit, with a 33% rate. In the cases of donations, loans or parental concessions officers must carefully examine all the data available, as well as whether the person doing the offering is legitimately able to make such as payment.

 

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