Newsroom
An internal audit has raised serious concerns over how Cyprus’s Tax Department handled suspected tax evasion at bars and restaurants along Mackenzie Beach in Larnaca, finding what officials described as a “troubling pattern of leniency” toward businesses with known irregularities.
Speaking on SPOR FM 95.00, Audit Office official Giota Michail said that in several instances the Tax Fraud Investigation Unit (TFIU) should have been called in to pursue potential criminal offenses. “Tax evasion is not an administrative lapse — it’s a criminal act,” Michail emphasized.
According to the Audit Office’s special report, inspectors visiting one establishment found cash hidden in a black pouch next to the official register, while a power outage occurred at 4:45 a.m., just as auditors attempted to print the day’s sales report. Staff behavior during the inspection, the report noted, suggested an effort to conceal takings.
Despite mounting evidence, the audit found that most of the businesses in question were taxed solely on their own declarations through 2021, without substantive audits or verification. In several cases, the department allowed statutory deadlines to lapse, effectively preventing the state from imposing additional taxes.
The findings also reveal that companies with auditors’ reports containing reservations or warnings escaped scrutiny altogether. Meanwhile, a separate briefing from the Deputy Ministry of Tourism confirmed that none of the Mackenzie venues under review held valid operating licenses — an issue outside the audit’s formal scope but one that further underscores the absence of regulatory enforcement.
The Audit Office urged the Tax Department to overhaul its approach, calling for risk-based inspections, closer coordination with the TFIU, and new mechanisms to align tax enforcement with judicial precedent. The goal, the report warned, is to stem the loss of significant public revenue and restore confidence in the fairness of the tax system.
