Majority declare losses in tax list
MORE than half of companies and some 70 per cent of individuals declared a financial loss according to the newly released 2020 tax list.
The list was published by the Finance Ministry’s Revenue and Tax Office. It showed that 3,029 out of 5,499 registered firms and 14,477 out of 20,655 self-employed taxpayers declared a “loss”.
Accordingly, 55.08 per cent of companies operating in the TRNC and 70.09 per cent of self-employed taxpayers could not be taxed in the previous tax year.
Economist and tax expert Kemal Özçakır stated that every newly established company can declare a loss for a period not exceeding three years and that “this possibility” should be taken into account when judging businesses’ tax records.
Expressing that it is difficult for companies to start making profits “from the moment they open”, Mr Özçakır stated that it is understandable that a company that opened in the last three years does not pay taxes when “depreciation and investment discounts” are also considered.
Mr Özçakır said that if the situation based on a declaration is “unsatisfactory”, it is possible to apply for a tax assessment “ex officio” and in cases where it is impossible to determine the “tax base” completely or partially based on ledgers, records, documents or legal measures, it will be determined by people approved by the Valuation Commission or authorised to conduct tax audits.
Mr Özçakır also said that there are some taxpayers who are “known to have not opened in the last three years” and “even established new workplaces in 2020 by declaring losses and not paying taxes”, pointing out that this is an “abuse” of the “relatively lax” situation caused by the Covid-19 pandemic.
“When private individuals on the list declare income but don’t pay taxes, they have a base exemption in the band of 10 percent of their earnings,” he continued, adding that further personal tax allowances are added for those who are married and for any children.
Revenue and Tax Office Workers Union (Vergi-Sen) head Şebnem Kuyucuoğulları said that when the needs of the country are taken into account, the number of tax inspectors “which should be 510 is only 300”.
She explained that the Revenue and Tax Office, which is among the “busiest” government offices, “persistently” suffers from staff shortages, which has dealt a “serious blow to tax audit activities”.
She also pointed out the fact that the “total lockdown” period of March to May 2020 affected the country’s economic activities “extremely negatively” and that many companies and individuals are in a “very difficult situation”, while some used the pandemic as an “excuse”.
“There are those who took advantage of the pandemic and those who didn’t,” Ms Kuyucuoğulları said. “We can’t lump every company and individual together.
She said that with the “lump sum taxation” method, taxpayers in a tight spot pay their taxes in instalments and those who pay in advance are given a discount of up to 10 percent.
Pointing out that companies have a chance to deduct their “retrospective five-year losses from their taxes”, Ms Kuyucuoğulları said that expenses such as flight tickets are also tax deductible.
Noting that companies have the “opportunity to work with accountants more than individuals do”, Ms Kuyucuoğulları noted that this is an “extra advantage” for them, meaning that a “snack bar and a giant company can’t be lumped together”.
TAX ‘CHAMPIONS’
Meanwhile a league table of the corporate tax “champions” of the TRNC in 2020 was topped by the bank İş Bankası, which paid nearly 62 million TL on declared taxable income of around 263 million TL.
Second was Voyager Kıbrıs Ltd (Merit Group), which paid roughly 32.6 million TL, followed in third place by Aksa Energy, which paid about 30 million TL in taxes.
The individual with the highest personal tax bill of 2020 was Tahir Topal, owner of the Serena Butik clothes store chain, who paid just over 3 million TL on declared earnings of 9.6 million TL.
Second was Burak Başel, with a tax bill of around 2.8 million TL.
Third on the list was Jinder Singh, who paid almost 1.4 million TL in tax.