From 1 January, State Monitors All Bank Accounts

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Some citizens worry their taxes might increase substantially.

Many people have difficult time accepting the latest legislative changes, which have enabled the Tax Administration to monitor all bank accounts starting from 1 January. Some are even thinking about how to avoid the controls, reports Jutarnji List on February 9, 2017.

Banks are now required to submit to the Finance Ministry “data from all domestic and foreign currency accounts of legal entities, persons carrying out business activities in crafts and special professions, and citizens, including data on amounts in current accounts and savings deposits”.

In order to try to hide at least part of their income, some people are considering opening new bank accounts in countries where they would have more privacy. However, according to the EU rules and regulations, there is nowhere in the European Union where it is possible to hide. Since the automatic exchange of bank information has become an important instrument in the fight against cross-border tax evasion and fraud, an EU directive lays down a set of data on bank accounts which are to be automatically exchanged between member states of the European Union.

With the latest changes to the General Tax Law, the tax authorities have now been given a right to monitor all transactions on all accounts in Croatian banks. Therefore, people fear that the new legislative changes could increase their tax liabilities, because the taxes now might have to be paid on incomes such as housing savings income, remittances from relatives in Croatia or abroad, and small payments and loans between friends and family members. If the tax authorities suspect that the income might be money earned by activities in the informal sector, they might ask the taxpayer to explain its origin.

Tax Administration points out that they have developed a system of risk analysis in order to early detect and initiate actions when, on the basis of available data, they see significant deviations or discrepancies in taxable receipts of taxpayers, which may indicate illegal or fraudulent acts. “Therefore, any fear that normal behaviour of taxpayers, such as transferring funds to the accounts of family members (students, children…) would be subject to taxes is not justified. If, for any reason, a taxpayer is asked to justify transactions in their account, the Tax Administration will accept all authentic documents evidencing sources of revenues”, announced the Tax Administration.

It added that the delivery of data from the banks “is not anything new in the tax system”, since until now some of the information on the accounts of citizens and businesses were delivered automatically, while some of them were received by request. “Starting from 1 January 2017, all information will be continuously received automatically. For the submission of data, ‘removal of bank secrecy’ is not necessary, since the privacy of citizens, as well as the confidentiality of their data, will not be compromised”, concluded the Tax Administration.


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