ETCB prevents loss of more than 50 million euros of income tax in six months

ETCB prevents loss of more than 50 million euros of income tax in six months
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According to Airi Lepassar, the ETCB's income tax risk manager, these cases are mainly related to income tax liabilities arising from concealed movement of companies' profits, but also from errors in the calculation of dividend tax exemption and contributions to and payments from equity. “We have imposed the record level of income tax as a result of contacting around 800 legal persons, almost a third of which have had to correct their tax data,” Lepassar said.
 
The biggest irregularities identified have been deliberate schemes aimed at obtaining a tax advantage. For example, transfer pricing regulations have been abused, profits have been moved to a group account on preferential terms, or loans have been granted to parent companies on preferential terms. Moreover, restructuring of companies has been used to move out profit, thereby attempting to create a right to tax exemption.
 
Cases where companies knowingly use cross-border schemes to obtain the right to tax exemption on dividends continue to be discovered. “For example, in order to ensure that the sale of a company does not generate profit in Estonia, where its payment is taxed, intermediate companies are established in countries where the sale of shares is exempt from tax.  Furthermore, mistakes are made upon declaring non-monetary contributions to equity, when the value of equity is increased disproportionately and consequently also the right to exemption. Errors are also made in interpreting the tax law regulating the contributions made with assets in the course of a division - under commercial law, contributions to equity are made, but this does not give rise to the right to a tax exemption," Lepassar explained.