Iceland ‘tax amnesty’ proposal
Icelandic Foreign Minister, Bjarni Benediktsson. Photo: Golli
Iceland’s Finance Minister, Bjarni Benediktsson, will later this year be putting to committee a draft bill on a possible amnesty for tax evaders.
Such a ‘tax amnesty’ would enable tax payers who have previously failed to declare income or foreign assets to come forward and do so without fear of criminal prosecution.
Legislation similar to that being proposed by Benediktsson has been implemented in countries such as France, Germany and the UK, as well as in Scandinavia, and has proven to have had a very positive effect on tax revenue.
Letting tax evaders off?
Initial discussions in the Icelandic Parliament (‘Alþingi’) were not entirely positive, with many MPs considering that such an amnesty would be tantamount to “letting people off” who had broken the law.
On the contrary, explains Benediktsson. “This method provides people with an incentive to sort out their affairs and make a clean breast of it.”
Benediktsson will be submitting a draft ‘tax amnesty’ bill to the Alþingi Economic Affairs and Trade Committee in the autumn to ascertain whether sufficient consensus on such a move exists.
Ten days to pay up
Individuals would pay tax on their previously undeclared tax base at an as yet undecided rate – possibly 35% in the case of revenue from income – and would face no criminal prosecution in respect of their earlier failures.
They would have ten days to pay the new tax, failing which they would after all face criminal prosecution.
This option would not be open to tax evaders against whom the Icelandic tax or police authorities have already launched inspection or investigative operations regarding foreign assets or income.
