25th August 2023
A country that has managed to recover billions in euros of lost tax revenue. A summit to address tax collection and policy organised by three prominent South American nations. America’s wealthiest African American back in the spotlight, having already paid millions to the Inland Revenue Service (IRS) for tax evasion. Our latest news round-up focusing on tax fraud and the dangers of non-compliance highlights the necessity to adhere to all local tax and legal regulations. Recruiters placing contractors abroad must heed these warnings or potentially face catastrophic consequences.
Let’s start with Robert Smith, the founder, chairman and CEO of Vista Equity Partners, a private equity fund that holds significant stakes in tech and software companies such as Apptio and Citrix. If you recall, Smith, an African American billionaire businessman, settled tax fraud charges with the IRS believed to be $139m, as part of a 15-year scheme to conceal $200m in income. More recently however, the US software intelligence company Tibco, part of Vista Equity Partners and Smith’s portfolio, is embroiled in a tax evasion scandal to defraud the South African Revenue Service (SARS).
“Tibco, a US software company, is currently in the courts and will likely be deemed liable for major tax evasion in addition to the contravention of abiding by the country’s BEE codes of good practice. If Tibco is found guilty, records show it could be on the line for close to R1 billion [£41m] of its “deemed profits” which had been disguised as management fees, which would have brought hundreds of millions to SARS and maintaining the infrastructure of South Africa,” explains Brian Mpono, group corporate affairs executive at Techsoft, which has been trying to contact Smith.
From the southern tip of Africa we move to the port city of Cartagena where the first summit on “inclusive, sustainable and equitable taxation” was held by the governments of Colombia, Brazil and Chile. Hosted by the Economic Commission for Latin America and the Caribbean (ECLAC), senior officials from 15 countries gathered to discuss greater tax transparency and ways to improve tax collection in light of growing tax evasion and the use of tax havens to avoid paying taxes. The summit also addressed inequality in the region where 77% of the wealth is in the hands of the richest 10%.
Following the events in the Colombian coastal city, the Trade Union Confederation of the Americas (TUCA) and Public Services International (PSI), also a trade union, published a report with the measures and reforms they’d like to see in place. Tax collection, cooperation, tax transparency and the exchange of information were key areas outlined in the document. “Ministers should meet at least once a year from now on and there must be regular and signiﬁcative consultations from the outset with the trade union movement and civil society,” was one of the main recommendations.
Tackling tax evasion and fighting fraud
To the other side of the world and the infamous $105m Plutus tax fraud scandal, one of the biggest such scandals ever seen in Australia. Adam Cranston, one of the chief perpetrators and the son of a former Australian tax commissioner, used the money fraudulently gained to fund a lavish lifestyle. Following a nine-month trial in 2022, he was found guilty in March 2023 of fraud and money laundering. Simon Anquetil, the “architect and overall manager of the scheme”, who made $12.2m to Cranston’s $6.9m, was sentenced to seven and a half years with five years without parole.
Meanwhile, in sunny Spain, the local tax agency (‘hacienda’ or ‘agencia tributaria’) has upped the ante in its battle against the black economy and tax evasion. Almost 40,000 investigations were carried out in 2022 with close to €17bn being recovered, the majority the result of a concerted effort to clamp down on corporate tax fraud by large companies. The ‘Recovery Plan’, agreed with Brussels, is proving difficult with the income recouped in 2022 actually 1.3% less than in 2021.
And finally, the Independent Authority for Public Revenue (AADE) in Greece is investigating a case of tax evasion in the northern port city of Thessaloniki. The matter centres around an as yet unnamed e-commerce clothing and footwear business and the non-disclosure of €6m of sales transactions during 2019-20. Authorities are also looking into subsequent years before establishing the final fine.
Yet again we see powerful companies and prominent individuals all over the world being brought to justice for tax fraud and evasion. And with countries continuing to cooperate to improve transparency and tax collection, recruitment businesses placing global contractors abroad must pay attention to taxation. Our 6CATSPRO teams can answer all your contractor compliance questions.
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