Your Tax Return, Please: What Tax Avoidance Can Lead to
The start of the year proved especially intense for many as another important task added up to the regular certificates and reports – income declaration. Every new government begins the same way, declaring the “last and decisive war” on the shadow economy. One of the methods to fight the twilight is a declaration of assets and legal confirmation of funds.
This article details what tax avoiders may face and also offers a description of the tax return filling process. The lawyers at SBSB International Legal Firm know what is needed to confirm the source of funds appropriately and submit the relevant return.
What is a tax return?
A tax return is an official taxpayer statement of his/her profits in a given period, including applicable tax benefits and discounts. According to the Tax Code in effect, the tax return is defined as a document submitted by taxpayers to the regulatory authority within the term prescribed by the law.
If you are officially employed with a company, those matters are dealt with by your employers who pay the salary and relevant taxes. But there are various situations – inherited property, sale of real estate, leased property, purchase/sale of securities, etc. – when income is also subject to declaring.
SBSB recommends you declare your income since it is the taxes paid according to the return that will help confirm the legal source of funds and save you the trouble of giving explanations to the bank when opening accounts or performing transactions.
Who must fill out the return and why?
When hired by private individuals, people receive envelope wages and are not registered as self-employed persons. In this case, the income obtained must be declared in a tax return.
The reporting of funds received from abroad from relatives has become relevant in recent years. Overseas money transfer recipients (including transfers to bank cards) must submit the annual return and pay taxes.
We at SBSB know when individuals have to fill out the return form and will be happy to give top quality advice.
Which income is not required to declare?
The Fiscal Service does not demand reports on the income for which the taxes have already been paid. Those include:
- salary, retirement and other social benefits;
- income received through gifting/sale/exchange of property provided that the transaction involves the services of a notary and payment of taxes;
- wins and prizes on which the activity organizer pays taxes itself;
- earnings from property lease where the lease-taking organizations pay the taxes themselves.
What is there to declare?
Starting January 1st, 2020, taxpayers shall report their property status and income under a new form. Now they have to declare not only the financial income but also movable and immovable assets, securities, valuables, and money, with the guiding principle being equivalent to the one applicable to electronic declaring imposed by the National Agency on Corruption Prevention.
Tax returns are obligatory for entrepreneurs using the general tax treatment system, for self-employed professionals (notaries, lawyers, arbitrators) and persons leaving abroad for permanent residency.
Tax avoidance: consequences
Failure to declare income could cause a variety of issues, including transaction blockage, bank account freezing and alerting of state authorities about suspicious transactions undertaken by you. It is best to refer to experts at once: they will give relevant advice and help confirm the appropriate source of income, and submit the tax returns.
SBSB is highly experienced in processing requests related to the source of funds gained by individuals and international companies in multiple jurisdictions and knows which income must be declared to prevent any tax avoidance issues you and your company could face.
SBSB lawyers will pick the perfect solution in no time, guided by your personal specifications and needs, saving you and your business the trouble of incurring unnecessary risks that may be involved in the financial transactions. Do not hesitate to join our Telegram chat for details.