Pandemic leads to drop in arrears to state

Pandemic leads to drop in arrears to state

The suspension of tax obligations and incentives for the timely payment of taxes (with a 25% discount on paying arrears’ tranches in time) led to a drop in expired debts in recent months, according to data released by the Independent Authority for Public Revenue on Wednesday.

Although the creation of new arrears had already begun to slow in previous months, the measures taken in the spring to contain the impact of the pandemic played a major part in reducing new debts to the tax authorities.

The IAPR figures showed that in May 2020, new expired arrears – i.e. tax debts created during 2020 – amounted to 2.373 billion euros, while at end-April they had come to €2.286 billion. That means the fresh debts to the taxman created during May amounted to just €87 million, compared with an average rate of €400-500 million per month in previous months. Compared to the year before, the contrast becomes even starker, as every month new tax debts amassed had amounted to some €1 billion.

Nevertheless the new debt settlement programs, with 100 tranches and the new standard scheme which has 24 installments, appear to have reduced the creation of new arrears, while the suspension of payments appears to have led to a halt in new debts.

Of course, come May 2021, the amounts due that are currently under suspension, which are estimated at €1.5 billion, will be added to the huge debt pile of €105.45 billion unless they are paid in the meantime or enter a repayment program.

The total amount due was reduced at end-May by 0.17% from €105.63 billion at end-April. Some €22.2 billion of that debt is considered to be non-collectible, for a variety of reasons. That takes the actual amount the state can expect to get back down to €83.2 billion.

Along with the containment of new debts, there has also been a reduction in the number of state debtors: Individuals and enterprises with debts to the tax authorities numbered 3,853,889 at end-May, against 3,913,606 a month earlier and more than 4 million at the end of last year.

The number of debtors who have had their assets seized has dropped to 1,740,507, against 1,770,813 at end-2019.

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