Šuker finally introduces asset origin investigation

It is impossible to determine the number of proceedings against individuals for whom tax authorities have established that they acquired assets worth more than the income reported in their tax returns

writes Ivica Grčar
[email protected] 

A reader contacted me with questions about the investigation of asset origin and the introduction of asset cards. He believes that the introduction of asset cards legalizes property acquired during the transformation because once it is in the asset card, its origin can no longer be definitively questioned. In the world, effective tax supervision is not possible without investigating the origin of taxpayers’ assets. In contrast, Šuker has repeatedly carelessly promised that investigations into the origin of assets would not be conducted in Croatia, as the reintroduction of that ‘communist relic’ is out of the question.

Tax supervision
Since tax authorities could not effectively conduct tax supervision without investigating the origin of assets, this procedure began to be applied quietly under the euphemistic name ‘investigation of sources of funds for acquiring assets’. Recently, I tried to find out how many of these ‘investigations of sources of funds for acquiring assets’ there were, which supposedly were not investigations into the origin of assets, or how many proceedings there were for ‘taxing the income of individuals who were found to possess assets or funds that significantly exceed their registered income in the previous period’. 

The Ministry of Finance also responded that ‘the Tax Administration continuously collects, analyzes, and compares data on taxable income with data on acquired real estate, movable and other property, as well as other expenses of individuals and their obligations during the tax period for the correct determination of income tax and other tax obligations, especially when processing annual tax returns of individuals and legal entities. If it is determined that the sources for individuals’ assets are not proven, income is determined as the difference between the value of the assets and the proven amount of funds for their acquisition. Cases where there is suspicion of a criminal offense would be reported to the State Attorney’s Office, and the verification of data on sources of funds and acquired assets would also be conducted at the request of the State Attorney’s Office.’ The tax authorities avoided answering how many such proceedings there were.

Regulation
I remind you that last year I published an article in this column about the tax regulation with the difficult-to-understand title of 27 words: ‘Regulation on the conduct in good faith of participants in the tax-legal relationship, economic entity, and forms for reporting facts for which there is an obligation to report and statements on the sources of asset acquisition’ (NN 59/09). According to this regulation, an individual for whom tax authorities have determined that ‘possesses assets or funds that significantly exceed the registered income of that person in the previous tax period’ must provide ‘credible evidence of the sources of funds for private consumption that significantly exceeds the income that this person earned in the previous period’. By reading the mentioned regulation, we also noticed that tax authorities introduced a new term ‘funds for private consumption’. Tax authorities probably have problems understanding the definition of money (they were confused by Smiljko Sokols’ statement that money is not property if it belongs to the president). It is unclear what ‘funds for private consumption’ are if they are not money or property? The mentioned regulation prescribes what ‘if an individual does not provide credible evidence’. We wonder who judges whether the provided evidence is credible? Well, of course, tax authorities arbitrarily decide on that.

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