25th October 2023
If your agency works with international contractors then you would be forgiven for assuming that, post-pandemic, the task of placing specialists around the world might become slightly easier. However, while countries have dropped their covid-restrictions, agencies now have to contend with legislative systems that are rapidly shifting in attempts to combat the rise of tax evasion and fraud. This means that staying abreast of this changing environment has never been more important. We’ve outlined some of the latest stories for you to be aware of when placing talent around the world.
Reducing evasion in Greece could boost revenues by €2bn says new report
As well as introducing new proposals designed to tackle freelancer and contractor-led tax evasion, the Greek government is also looking into plans that aim to tackle tax evasion at a national level. According to research carried out by the European Commission, Greece could gain up to €2 billion per year by 2026 if it continues to prevent tax evasion at its current rate and introduces new proposed measures. The additional revenue, combined with projected economic growth, will be used to cover improvements to domestic welfare benefits systems and could lead to tax reductions for Greek citizens. Finance ministry sources have remained tight-lipped over the details of the new measures, however sources suggest that they include the linking of POS terminals with cash machines, pre-filled VAT and income statements based only on income/expenses recorded in the MyDATA system, expanding the use of POS terminals throughout the market and the aforementioned changes in the taxation of the self-employed. Agencies placing specialists in Greece are advised to follow both these proposals and additional changes designed to specifically tackle evasion by contractors and freelancers if they are to avoid inadvertently breaking the tax law.
Tax reform planned in Cyprus will increase challenges for agencies working legally with international contractors
Cyprus also appears to be following the lead of its Greek neighbours as it is also set to launch a major overhaul of its tax and regulatory systems. Earlier this month, Finance Minister Makis Keravnos highlighted that these regulations play a critical role in fostering economic development and ensuring sustainability through the transparent and fair distribution of the tax burden. He advised that Cyprus needs to do more to tackle revenue lost through evasion and fraud and, during a speech, he acknowledged the long-standing demand for reform from groups across the country. He also stressed the government’s commitment to crafting a modernised framework ‘aligned with the evolving economic landscape’ and ‘characterised by transparency, simplicity and minimal bureaucracy’. Like Greece, there is still an absence of detail around the proposed changes, however agencies operating here are advised to follow the situation closely.
Sri Lanka has to do more to actively prevent tax evasion says finance minister
And finally, regular readers of our blog will be aware that Sri Lanka has been working closely with the International Monetary Fund (IMF) in order to release additional funds to prevent the country from falling into bankruptcy. However, according to recent comments, the domestic tax authority has far failed to make enough progress in boosting its tax revenues and will have to wait to be granted access to the second tranche of payments. An IMF team concluded a visit to the island earlier in October and said that discussions would continue over an agreement on how to keep up the momentum of reforms, and unlock the second installment of funding that was due at the end of this month. Sri Lanka plunged into its worst economic crisis last year, suffering severe shortages that led to major protests that eventually ousted President Gotabaya Rajapaksa. It declared bankruptcy in April 2022 with more than $83 billion in debt — more than half of it to foreign creditors. The IMF agreed in March of this year to a $2.9 billion bailout package as Sri Lanka negotiates with its creditors to restructure the debt, aiming to reduce it by $17 billion. It released an initial $330 million in funding for Sri Lanka shortly after reaching that agreement. Many professionals in Sri Lanka are demanding a reduction in income taxes, and some have left the country over the issue and professionals – and agencies – operating here have been advised to monitor the domestic social and financial situation closely before committing to contracts here.
For agencies, working legally with international contractors has never been more challenging. Not only are firms attempting to tackle often highly complex regulations in a foreign language, this legislation is changing at a rapid pace, meaning agencies must do everything they can to remain up to speed. If your firm is in any doubt about its ability to remain compliant, wherever you are placing talent, then get in touch with our expert team.
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