Italy Joins Global Tax Evasion Crackdown

The Italian government has announced a major drive to clampdown on taxpayers who hide their assets offshore – in a country where evading the taxman is a national sport.

With a fiscal debt of around £1.7 trillion, the Italians have launched what is an unprecedented campaign to generate more tax revenue.

Among the moves are a new property tax and an increase in sales tax.

The issue of tax evasion is massive in Italy, a country widely-acknowledged to have one of the world’s biggest tax cheating problems, and where an estimated £103 billion of tax goes uncollected every year.

Italians are now restricted to a limit of £858 when making cash payments which means authorities can follow a paper trail as they try to pinpoint those who report having little income but can afford luxury cars.

Big name prosecutions

Companies are also being targeted, especially those who shift money abroad without paying taxes.

Last year, two big name firms were successfully prosecuted for moving money to Switzerland in cases which resulted in £515 million extra tax payments.

Since then, more big industrial names have been investigated, including Google and the fashion house Dolce and Gabbana.

A spokesman for Italy’s financial police, the Guardia di Finanzia, said: “We are investigating more aggressively international tax evaders than we have done previously because those who move money abroad are stripping Italy of its wealth. It is now very important to control how much capital goes abroad.”

This moving of money led to Italy losing £14.6 billion last year in undeclared income and the financial police say this is a huge leap from the £9.4 billion which was undeclared in 2011.

The Income Meter

The money is mainly moving to accounts in Luxembourg, with Ireland and Switzerland also proving popular destinations.

In a bid to combat the capital flight, tax inspectors have ramped up the number of audits of companies earning at least £85 million to 2,700 in 2011 – a fivefold increase in five years.

To underline its commitment to find tax dodgers, the financial police have recently introduced the ‘Redditometro’ – the Income Meter – which compares a family’s outgoings with income.

The procedure analyses spending patterns and compares what a family should be spending, depending on where they live, with what they declare they earn on their tax return.

Critics say the process is too intrusive, but the police have announced that the system works and they have seen a huge increase in the number of people calling a hotline to report tax dodgers since the meter was introduced.

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