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The Spanish tax authorities have escalated their operations recently to include a number of spot inspections for a wide range of small businesses - particularly those which take a high volume of cash payments without issuing reciepts. A number of cases has seen inspectors close the business on the spot and confiscate assets pending an investigation.
Tax inspectors made about 15,700 such visits duting 2012, up from about 8,700 in 2011, with the agency reporting suspicious activity in about 40% of the cases. The taxes identified and penalties charged form this measure uncreased by 11% during the first 11 months of 2012, when compared to the same period of 2011, to stand at €10.2 billion.
The agency also plans to increase the number of inspections made throughout 2013.
The measure comes as part of efforts by the Spanish government to curb endemic tax evasion as it tries to close a budget deficit that stood at 9% of GDP in 2011. Last year, the government limited cash transactions to no more than €2,500 and gave tax incentives to people who declared previously undeclared assets. One controversial new move involves showing up at businesses in debt to the tax agency and, with judicial permission, confiscating money from their cash registers during business hours.
Various estimates place Spain's underground economy at 20% to 25% of GDP, far above that of countries such as Germany or the U.S., and combatting this could increase tax collection by billions of euros. At 32.1% of GDP, Spain's total tax revenue in 2011 was well below the average for euro-zone countries, according to Eurostat.
However, quite pointedly one expert has accused the Government of looking to the wrong people in addressing the issue of tax fraud : "The administration talks a lot about information technology [to combat evaders], but the only thing it does is bother small businesses," said Juan José de los Mozos, chairman of the Spanish Association of Tax Consultants. "That's not where the real fraud is.
