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Compliance Concerns Under Consideration

Kitty Miv, Editor
08 September, 2021

Last week we looked at the big ticket stories, but when it comes to tax at least, the Devil is often in the details, and so it is to the relative complexity of compliance and collection matters that we now turn our attention, starting with the recent announcement by the US Internal Revenue Service of the opening of the application period for the 2022 Compliance Assurance Process (CAP) program. The application period runs September 1 to November 1, 2021, with the IRS to inform applicants if they have been accepted into the program in February 2022.

Launched in 2005, the CAP is intended to support large taxpayers to engage with the IRS about potential issues before filing their tax returns, and to be eligible to apply for the CAP, new applicants must have assets of USD10m or more; be a US publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q, and 8-K; and not be under investigation by, or in litigation with, any government agency that would limit the IRS's access to current tax records.

In Panama, meanwhile, the Government there was congratulating itself on a job well done with regard to its just-closed general tax amnesty scheme, which generated around double the revenue expected, albeit with extensions to the eligibility period factored in.

After the last extension, taxpayers were allowed to settle tax outstanding as of January 31, 2021, by August 31, 2021. Providing at least 25 percent of the tax was paid by August 31 and the remainder by December 31, 2021, 85 percent of the interest and penalties can be waived.

In launching the amnesty, the Panamanian Government had hoped to generate PAB66m (USD66m) in revenues. By the end of July, the tax take was approximately PAB132m, according to Publio De Gracia, Panama's Director General of Income (DGI).

Last but not least, the doors have also closed on Finland's concessionary payment scheme for tax debtors. Finland has now stopped accepting applications from tax debtors for concessionary payment arrangements, with the deadline to apply for the relief set at August 31.

The Government previously legislated to offer a concessionary rate of interest to tax debtors and new tax payment deferral options, in response to the ongoing COVID-19 pandemic. The legislation provided that where a taxpayer entered into a payment arrangement with the tax authority, interest on outstanding tax liabilities would be reduced to 2.5 percent from seven percent.

Further, taxpayers were granted more time to pay tax debts already covered by a payment arrangement and the option to enter into a new tax payment deferral arrangement of up to two years, covering new tax liabilities.

Finland began accepting applications in late April, and as at the closing of the scheme, had received more than 22,000 applications, though in contrast to Panama, this was considerably less than the 39,000 taxpayers who sought the relief last year.

Until next week!


About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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