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Individual Taxpayers Pay The Price

Kitty Miv, Editor
02 November, 2021

Having spent quite a lot of time in recent weeks focusing on tax matters affecting corporations, this week, for a change of pace, we will be looking at initiatives primarily impacting on individual taxpayers, starting with El Salvador, where lawmakers have approved a government proposal for a new tax amnesty scheme.

The approved legislation will enable companies and individuals to regularize their affairs without interest and penalties, providing taxes are paid in full. The Government said that the amnesty scheme will cover amounts not declared up until June 30, 2021. Taxpayers who use the scheme would be required to make payment by December 10, 2021.

In Austria meanwhile, as part of the recent Budget, it was announced that, in addition to corporate tax changes and the introduction of a new carbon tax, there would be changes to the personal income tax regime.

The Austrian Government plans to cut the 35 percent personal income tax rate to 30 percent from July 2022 and to reduce the 42 percent rate to 40 percent from July 2023.

In the United States, the focus was on compliance, and the US Treasury issued a fact sheet on the Administration's proposals, currently being discussed in Congress, to require more information from banks on the financial affairs of US taxpayers.

The Treasury explained that the proposal is intended to be targeted at those taxpayers who accrue income in hard-to-trace ways, who typically exhibit much lower rates of compliance, as there is no third-party source that reports income to tax authorities. Treasury said it estimates that the cost of tax evasion among the top one percent of taxpayers exceeds USD160bn a year.

Compliance was also the focus in Europe, where MEPS were still up in arms about the Pandora papers, with the European Parliament calling for an investigation into any wrongdoing exposed by the Papers that took place in EU jurisdictions.

Adopting a resolution on October 22 by 578 votes in favor, 28 against, and 79 abstentions, MEPs identified what they see as "the most urgent measures the EU needs to take to close loopholes that currently allow for tax avoidance, money laundering and tax evasion on a massive scale."

They also called for legal action to be taken by the Commission against EU countries that do not properly execute existing laws, noting that numerous member states are delayed in their implementation of existing rules intended to counteract money laundering and tax avoidance. They called on the Commission to analyze whether further legislation should be proposed and establish if legal action against some member states is warranted.

And finally, in Malta, the focus was firmly on individuals in the recently delivered 2022 Budget, which included measures to support low-income workers and those working part-time or overtime, to improve the supply of affordable housing, and to introduce a new concessionary tax regime for artists and performers, with a 7.5 percent rate payable by such individuals, with effect from the 2022 tax 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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