Inspections reveal extensive tax evasion in restaurant business
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Inspections implemented at restaurants as part of a project for tougher tax enforcement have brought to light about EUR 29 million in income that had been kept hidden from the authorities.
The sum comprises unreported wages, unpaid taxes, and income that was never entered in a restaurant’s books. The abuses have led to an estimated EUR 15 million in lost tax revenue.
The figures are based on calculations by Finnish tax authorities between the spring and August of 2003. The sum is sure to increase, because data is available from only 400 inspections.
A total of about 800 inspections have taken place, and the project is continuing into next year.
Janne Marttinen of the project on developing cooperation among authorities says that cash is often pocketed without being entered into the restaurant’s bookkeeping, and that employees’ wages are often not reported to tax authorities.
The first of dozens of criminal trials are to begin in the autumn.
In spite of the crackdown, officials expect to recoup only a fraction of the unpaid taxes. In 1999 it was estimated that the state was losing about EUR 100 million in tax revenues each year in unreported wages alone.
"The result achieved in the project is reasonably good", says Hannu Kuortti of the Finnish Tax Administration.
A study on the impact of the tougher enforcement is in the making, but Kuortti and Marttinen say that the increased risk of being caught for tax evasion has led to a greater willingness among restaurateurs in the twilight zone of taxation to pay up.
While paying taxes may not be a top priority for many restaurants, keeping a licence to serve alcoholic beverages is important. The inspections have led to the cancellation of more than 80 liquor licences.
Kuortti and Marttinen are pleased that tougher tax enforcement is improving the competitive position of honest restaurateurs.
During the project the state has recouped more than EUR 8 million.
Kuortti and Marttinen will not reveal the various methods used to catch the culprits, but they do note that one easy way is to compare a restaurant’s acquisition of alcoholic beverages with its bar sales.
Helsingin Sanomat
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| 6.9.2004 - TODAY |
 Inspections reveal extensive tax evasion in restaurant business |
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