The biennial preventive agreement as a way to overturn the relationship between the tax authorities and taxpayers, with a view to responding to the problem of few fiscal controls. This was declared by the Deputy Minister of Economy, Maurizio Leo, at the hearing on 30 October
Il agreed biennial budget as a way to overcome the problem of few tax controls.
In the face of a tax gap of around 65 billion per yearthe total number of checks carried out on the mass of ISA subjects was equal to 5 percent in 2022percentage reduced to 2 percent in 2023. These are the data from the Court of Auditors reported by Deputy Minister of Economy Maurizio Leoduring the hearing in the Senate Budget Committee held today, 30 October.
A few hours after expiration of the biennial preventive agreement, attention is therefore drawn to purpose of the agreement with the tax authorities: the cards are shuffled on the table, with a view to establishing a dialogue ex ante driven by the need to reverse the trend on poor assessment capabilities.
The biennial preventive agreement as a way to solve the problem of few fiscal controls
“There is a whole world of subjects that are not controlled, but not due to the ill will of the Financial Administration but precisely because there is an operational capacity that does not allow for 360° checks.”
This is the reason behind the introduction not only of the biennial composition with creditors, but also of further instruments envisaged in the implementation of the tax reform and in particular of the cooperative compliance and of tax control framework.
“We have data that is worrying: 1.8 million taxpayers declare less than 15,000 euros, so we must attack the world of these subjects and recover taxable income.”
The words spoken in the Commission dal Deputy Minister Leomind and supporter of the two-year preventive agreement, reveal the reasons behind the introduction of the controversial and discussed tax pact.
It is a way to establish a “preventive dialogue” between VAT numbers and the Financial Administration: the Revenue Agency prepares an income proposal and, for the company or professional who accepts the prepared account, they are investigations were frozen for the two-year period concerned.
“You agree on the amount to pay and you are safe for the next two years”: this is also highlighted by the commercial with which the MEF, in recent weeks, has attempted to give it sprint final to memberships to the agreement, expiring on 31 October and without the possibility of reopening.
In the Government’s intention, therefore, the pact with the Tax Office contributes to subvert the logic of the investigations which, at present, are ineffective and not very effective.
Does the end justify the means? The biennial preventive agreement “throws in the towel” on tax controls
At the basis of the introduction of the biennial composition with creditors there is therefore the undeniable fact ofinability at present to carry out detailed checks and thus identify the pockets of irregularities that lead to those 65 billion annual tax gaps.
QuestionableHowever, there is the way to overcome this problem.
The agreement, accompanied by a five-year amnesty which benefits those who have voluntarily hidden income from the State, it will lighten the workload for offices of the Tax Office, streamlining the assessment procedures.
At what price? From Deputy Minister Leo no data arrivesbut to those who ask if there will be one reduction in revenue he responds by highlighting that, taking into account that no revenue has been estimated, there will necessarily be an increase in revenue. “Whatever comes is all welcome” he states during the hearing.
To evaluate the impact of the tool, however, we must consider who is more convenient to join it.
Certainly all businesses and professionals who, based on the performance of their business, have already the certainty that their actual income in the next two years will be higher than that agreed upon. But also those who hid income from the tax authorities from 2018 to 2022 and can now catch up by paying a reduced tax on a flat rate tax base.
Adherence to the concordat instead becomes a ternal to the lot anything but convenient for the people of VAT numbers who, without certain datafinds himself in the position of having to accept a higher income and freeze the taxes due for the next two years.
On the other hand, even before the numerous changes that have distorted the structure of the two-year composition with creditors, the Budget Service of the Chamber had already highlighted the utilitarian reasoning at the basis of the choice to join the agreement, identifying as “typical taxpayer” those who, considering the possible development horizons of their business, will be able to bring you economic benefits.
In summary, those who know that the agreed taxes will be lower than those actually due taking into account the growth of their income will join the agreement.
Potentially therefore from the agreement a reduction in revenue may result for public coffers, an element that complements the Leo measure profiles of illegitimacy taking into account the principle of ability to pay and progressiveness provided for in Article 53 of the Constitution.
While therefore considering the need to resolve the problem of the difficulties for the Financial Administration in carrying out widespread and effective controls, the agreed upon is the best choice? A question that we leave open and the answer to which will only come in the next few months, when the first data on the impact of the measure will begin to arrive.
The Biennial Agreement: Tax Talks or Tax Walk?
So here we are, folks! In the exciting world of tax reform—a world so riveting, it makes watching paint dry seem like a thrill ride at Alton Towers. The buzz is all about the new biennial preventive agreement, something the Deputy Minister of Economy, Maurizio Leo, claims will turn the tide on the worn-out relationship between tax authorities and the average taxpayer. I guess it’s like saying, “Come sit down, let’s talk this over,” before diving into a game of Monopoly where your banker has all the properties and you are stuck with the chance card that reads, “Go directly to jail.”
What’s the Deal?
The gist of this biennial budget is to combat the scandalous tax gap of around 65 billion euros a year. If you’re wondering why your local park looks like it hasn’t seen a gardener since the last recession, now you know! Back in 2022, a mere 5 percent of taxpayers were checked, and now it’s 2 percent—talk about dwindling enthusiasm for fiscal responsibility. I mean, it’s not really checking if you only look under the sofa cushions.
“There is a whole world of subjects that are not controlled, but not due to the ill will of the Financial Administration but precisely because there is an operational capacity that does not allow for 360° checks.”
That’s code for “we simply can’t be bothered”—or is it? Enter the biennial preventive agreement! This lovely piece of paper aims to create a chat between taxpayers and tax collectors, which is basically like asking your dog to talk about his feelings. Will it actually work? Jury’s still out!
Let’s Get This Party Started!
So what does this agreement entail? Well, it’s all about preventive dialogue. Fancy, right? It’s the financial equivalent of saying, “If you tell me your income, I won’t check your closet for secret tax skeletons.” The Revenue Agency comes up with a proposed income figure, and if you nod eagerly and agree, voila! No probing for the next two years. It’s like a “Get Out of Jail Free” card, but for taxes! You know, just without the fun and board game aspects.
“You agree on the amount to pay and you are safe for the next two years.”
Now, one must ask: does the end justify the means? Because if I learned anything from my mother, it’s that “safe” is relative. Are we throwing in the towel on the whole audit charade and just saying, “You keep your money hidden; we’ll keep our sanity intact”? Not that it would be the first time the government thought about skipping the hard work.
Breaking Down the Fluff
Let’s dive deeper! The idea behind this spontaneous tax hug is to lighten the tax office’s workload while sharpening its focus on actual revenue-generating folks—like that one guy who seems to fly under the radar but showers the barista with 20 euro notes every day.
“1.8 million taxpayers declare less than 15,000 euros, so we must attack the world of these subjects and recover taxable income.”
Brilliant! Except… wait a minute. What’s the catch? Ah, yes! There’s a sweet little amnesty tucked inside this affair. You can clear your conscience and your tax returns from 2018 to 2022 by simply stepping forward and paying a fraction of what you owe. So for all the crafty accountants out there, it’s time to shine!
What’s the Takeaway?
In a nutshell, this agreement seems to open a shiny door for businesses and those who have been playing hide-and-seek with their income. But for other conscientious taxpayers? Well, you might find yourself at a disadvantage, simply hoping you’re not the next one picked up by the audit police!
As for the concern about decreasing revenue? The Deputy Minister is optimistic—so maybe he’s been hitting the happy juice. “Whatever comes is all welcome,” he exclaims. Sounds like the government is throwing caution to the wind as if the tax coffers will miraculously fill up with loads of appreciation and goodwill! How very Alice in Wonderland, wouldn’t you say?
Ultimately, we’ll have to wait and see whether this new pact is a game-changer or just another round of taxpayer roulette. Will it bring in the bucks down the line, or are we merely throwing glitter on an old problem? It’s all up for debate, but you know what they say—a penny saved is a tax avoided! Keep your eyes peeled for the first data to roll in. Until then, my friends, stay informed but do also consider a very good accountant!
The biennial preventive agreement as a strategy to transform the relationship between tax authorities and taxpayers has gained attention, particularly concerning the pressing issue of insufficient fiscal controls. This assertion was made by Deputy Minister of Economy, Maurizio Leo, during his testimony to the Senate Budget Committee on 30 October.
In light of a massive tax gap of approximately 65 billion euros annually, the total number of tax checks conducted on the population governed by the Individual Savings Account (ISA) framework was alarmingly low: just 5 percent in 2022, which has now dwindled to only 2 percent in 2023. These startling statistics were presented by Deputy Minister of Economy Maurizio Leo during a recent Senate hearing.
A few hours before the biennial preventive agreement’s expiration, attention focuses on the objectives of this innovative approach with tax authorities: it effectively reshuffles the cards, aiming to foster a proactive dialogue driven by a pressing need to rectify the chronic inadequacies in tax assessments.
The biennial preventive agreement as a method to address inadequate fiscal oversight
“There is a whole world of subjects that are not controlled, but not due to the ill will of the Financial Administration but precisely because there is an operational capacity that does not allow for 360° checks.”
This reality underpins the rationale for introducing not only the biennial composition with creditors but also supplementary mechanisms that are part of the broader tax reform agenda. Notably, these include cooperative compliance and the tax control framework.
“We have data that is worrying: 1.8 million taxpayers declare less than 15,000 euros, so we must attack the world of these subjects and recover taxable income.”
The statements made by Deputy Minister Leo, an ardent proponent of the biennial preventive agreement, shed light on the complex motivations behind this contentious tax arrangement.
This initiative aims to create a “preventive dialogue” between businesses and the Financial Administration: the Revenue Agency proposes an income amount, and if a business or professional agrees to this assessment, investigations are frozen for the duration of the two-year agreement.
“You agree on the amount to pay and you are safe for the next two years”: this assurance has been emphasized by the Ministry of Economy and Finance (MEF), which has recently sought to urge taxpayers to embrace the agreement before its 31 October deadline, with no chance for reopening afterward.
Consequently, the Government perceives the pact with the Tax Office as a means to overhaul the existing investigative methodologies, which have proven ineffective and largely inadequate in addressing tax compliance issues.
Does the end justify the means? The biennial preventive agreement “throws in the towel” on tax controls
The introduction of the biennial composition with creditors is rooted in the undeniable reality of the current inability to conduct thorough tax audits necessary to identify tax evasion contributing to the staggering 65 billion euro tax gap.
However, questions arise regarding the appropriateness of this approach to resolving the issue.
The agreement, alongside a five-year amnesty benefiting those who voluntarily disclose previously hidden income, aims to reduce the burden on Tax Office personnel, streamlining assessment protocols.
Nevertheless, one must consider the potential costs involved. Deputy Minister Leo did not provide definitive figures in response to inquiries about possible revenue reductions, but he emphasized that given the absence of revenue estimates, the expectation is one of increased revenue. “Whatever comes is all welcome” he asserted during his testimony.
To properly evaluate the implications of this agreement, it’s crucial to understand who stands to benefit the most. Businesses and professionals who anticipate that their actual income over the next two years will surpass the agreed threshold will find this agreement advantageous.
Additionally, those who have previously concealed income from tax authorities between 2018 and 2022 have the opportunity now to rectify their situation by paying taxes on a reduced flat rate basis.
Conversely, adherence to the concordat presents significant disadvantages for those VAT numbers lacking certain data, who may face a dilemma of agreeing to a potentially inflated income while simultaneously freezing taxes owed for the subsequent two years.
Prior to the various alterations that have complicated the biennial agreement structure, the Budget Service of the Chamber had already identified the utilitarian mindset driving individuals to opt into the agreement, with a “typical taxpayer” defined as one who can foresee economic benefits arising from their decision.
In essence, those who determine that the taxes stipulated in the agreement will be lower than what would be due based on their expected income growth are likely to enroll in the program.
There exists a significant potential that this agreement may lead to a reduction in overall tax revenue, a factor that raises concerns regarding the measure’s legitimacy, particularly in light of the Constitution’s Article 53, which upholds the principles of equitable taxation and the ability to pay.
While acknowledging the urgent need to tackle the challenges faced by the Financial Administration in executing comprehensive and effective audits, the question remains: is this agreement truly the optimal solution? This question remains open, and an answer will become apparent in the coming months as initial data reflecting the agreement’s impact begins to surface.
