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Police find 51 bn euros in undeclared earnings in 2013

False invoices, no returns, VAT avoidance among tax problems

23 January, 18:54
Police find 51 bn euros in undeclared earnings in 2013 (By Sandra Cordon) (ANSA) - Rome, January 23 - Finance police said Thursday they found almost 52 billion euros of undeclared - and untaxed - Italian revenues in 2013, part of the country's broader problem of tax evasion.

The discoveries from last year included income and revenues that were earned by individuals and companies, but not declared to tax authorities, as well as false expense claims and other tax dodges, police said.

As a result of the findings, some 12,726 company officials are being investigated for business-related tax offenses, including issuing or using false invoices, and procedures have begun for the seizure of 4.6 billion euros in real estate, currency, bank accounts and moveable property, said finance police.

Of those, 202 officials have been arrested. The problem of tax evasion is well publicized and a constant and long-running problem for governments.

Indeed, last month the head of Italy's inland revenue office, L'Agenzia delle Entrate, said that an estimated 130 billion euros is evaded annually in Italy. The problems have intensified in recent years as governments have struggled to meet their obligations in the midst of a double-dip recession that began in 2008-2009.

On the heels of that came a second crisis which reached depths in the past two years not seen since post-Second World War. That was further aggravated by austerity measures to avoid a Greek-like economic meltdown when interest rates on Italian bonds rose alarmingly high.

The hard medicine forced on Italy to try to regain its financial footing included programs cuts and tax hikes that businesses say have crippled their operations while stunting economic growth and job creation. Recession in Italy, the eurozone's third-largest economy, is just now beginning to show tentative signs of easing. For example, Italian national statistics office Istat reported Thursday that the country's exports beyond the European Union grew by 1.3% in 2013, particularly to the Mercosur group of countries made up of Brazil, Argentina, Paraguay, Uruguay and Venezuela, as well as to China, Japan, and Russia.

That suggests Italian companies are searching for new markets and widening their sales reach. Italy appears to be emerging from a deep recession, with gross domestic product (GDP) flat in the third quarter of last year compared with Q2, ending a run of eight consecutive quarters of negative growth. Still, the economy remains fragile with a tepid growth outlook.

On Tuesday, the International Monetary Fund said it had revised down its growth forecasts for Italy to just 0.6% expansion, compared with a previous outlook of 0.7%, for 2014.

Similarly, Italy's central bank said last week that it expects GDP to expand by 0.7% this year, rising to 1% next year.

The IMF has a slightly more positive outlook for Italian growth in 2015, when it forecasts growth of 1.1% .

However, that is weaker than the national inflation rate that averaged 1.2% in 2013, and if unemployment remains at the record-high 12.7% reported in November 2013, it suggests that the incentives to avoid paying out cash to tax collectors will remain weak.

According to the finance police, last year they discovered 8,315 evaders who concealed income or did not even file a tax return on 16.1 billion euros in revenues. About 15.1 billion euros that were not reported to tax authorities came from international income including "transfers of convenience" to tax havens as well as foreign-based companies' income earned in Italy that is subject to taxation here.

The finance police said much of that was uncovered by working cooperatively with agencies in other countries.

Almost five billion euros were dodged by Italians avoiding the value-added tax and more than 13,000 people were found to be working "in nero" or outside the legal system, meaning their work was not reported and they paid no tax. Taxes were avoided on another 16 billion euros through a variety of different types of tax scams and dodges including hiding or destroying bank accounts, officials said.