A new legal framework allowing closer cooperation between the Anti-Corruption Authority and the Tax Department has entered into force, enabling the direct investigation of potential tax offences involving officials and public servants. The legislation allows the Tax Commissioner to intervene in such cases without requiring prior approval from the Attorney General.

The law, signed by President Nikos Christodoulides and recently published in the Official Gazette of the Republic, follows the adoption of two legislative proposals submitted by Member of Parliament Irene Charalambidou.

Direct involvement of the Tax Department

Under the new framework, the Tax Commissioner may intervene immediately in corruption cases under investigation by the Anti-Corruption Authority. The process no longer requires the completion of the Authority’s investigation or prior notification and consent from the Attorney General.

Two main provisions define the new legislation.

First, the Tax Commissioner will now be informed directly by the Anti-Corruption Authority when potential tax evasion offences are identified during corruption investigations. This enables the Tax Department to initiate tax audits of the officials or public servants involved.

Second, the arrangement is intended to function as an additional safeguard against the concealment of tax evasion cases, as the information will now be transmitted directly from the Anti-Corruption Authority to the Tax Department.

Previously, the findings of the Anti-Corruption Authority were transmitted exclusively to the Attorney General, who decides whether to proceed with criminal or disciplinary investigations. If the Attorney General chose not to pursue further action, those involved would not face investigation for tax offences or any other potential criminal offences.

Under the existing system, the Attorney General and the Deputy Attorney General are not accountable for such decisions.

What the new law provides

The key provisions of the legislation include the following:

If the Anti-Corruption Authority identifies the possible involvement of an official or public servant in acts of corruption, it prepares a report and submits it to the Tax Commissioner along with any necessary information or evidence in its possession. The transmission of such information does not constitute a breach of the confidentiality obligations binding members of the Authority under the law.

When the Authority submits a report containing findings that may indicate the involvement of an official or public servant in corruption-related offences, the Tax Commissioner may conduct a tax audit to verify declared income and investigate the individual’s financial situation.

The audit will focus only on the tax years that the Commissioner considers causally linked to the findings of the Anti-Corruption Authority’s report. The investigation is carried out solely for the purposes of applying tax legislation and does not affect or limit the powers of the Attorney General.

Following the audit, the Tax Commissioner prepares a special report, which is transmitted to both the Attorney General and the Anti-Corruption Authority.

Past cases highlight need for legislation

Examples from recent years illustrate the need for the legislative change.

In a letter to the House of Representatives dated 8 September 2021, former Finance Minister Konstantinos Petrides confirmed that current and former Members of Parliament, ministers and other high-ranking state officials had failed to submit tax declarations for a decade, specifically during the period 2009–2019.

The information was requested by Irene Charalambidou through a parliamentary question addressed to the Minister of Finance, following allegations made by former Minister of Justice and Public Order Emily Yiolitis in her resignation letter to then President Nicos Anastasiades.

In her letter to the Finance Minister dated 24 July 2021, Charalambidou referred to Yiolitis’s claims suggesting that certain state officials, including individuals holding senior institutional positions, had submitted incomplete tax declarations. She asked whether the Tax Department had initiated any investigations based on those allegations.

Confirmation from the Ministry of Finance

In his reply to Parliament on 8 September 2021, Konstantinos Petrides confirmed key elements of the allegations.

He stated that the Ministry of Finance and the Tax Department had recognised the need to manage the tax compliance of politically exposed persons. In the absence of a publicly available register, an internal list had been compiled including approximately 100 individuals, among them sitting Members of Parliament, members of the Council of Ministers and other state officials.

Access to the list is restricted to authorised officials for confidentiality reasons, while monitoring compliance and conducting tax audits are assigned periodically to designated officers of the Tax Department.

According to data from the department’s electronic system, an average of 82.3 percent of politically exposed persons submitted income tax declarations on time during the period 2009–2019, while 8.7 percent submitted them late. Approximately 9 percent did not submit a declaration during the same period, either because they were not obliged to do so or due to non-compliance.

The Tax Department also evaluates information received through named or anonymous complaints and media reports, initiating investigations depending on the level of risk identified.

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