Estonia Quick To Ignore Tax Debts

By Global Tax Weekly

According to a recent ruling by Estonia’s Supreme Court, the country’s tax agency can no longer chase up tax debts that are owed five years after enforcement proceedings are initiated. Well, it’s a good job that tax debts aren’t waived so quickly in many other jurisdictions, given the often protracted nature of tax audits and investigations.

It emerged just last week that the average length of tax inquiries into large businesses in the United Kingdom are now taking more than three years to settle, with each case taking around 39 months to resolve in 2017/18, up from 34 months in 2016/17, according to Pinsent Masons, the law firm. Of course, this isn’t just hard luck for the tax authority. It’s very unfortunate for the businesses facing these interminably long investigative proceedings too.

As Pinsent Masons pointed out, these matters are not only financially expensive but they also are a drain on human resources, drawing away a company’s focus on its core activities.

Naturally, the larger the business, the longer an audit is likely to take. However, although tax litigation is a costly business for both sides, a more thorough audit is likely to benefit the tax agency most, in securing the most tax possible.

One study, from Syracuse University’s Transactional Records Access Clearinghouse, released in 2016, pointed out that revenues collected from large company audits fell 64 percent when the number of hours spent by the US Internal Revenue Service fell by one third during 2010-2015.

For the IRS, whether to pursue every last cent was probably a matter of resources available – or lack thereof. But, given these figures, it’s not difficult to see why some tax authorities, like a dog with a bone, are very reluctant to let go of tax audits.

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