Major Mackenzie venues escaped tax scrutiny despite red flags

The Audit Service has slammed the Tax Department for failing to properly check some of Larnaca’s biggest nightlife and event venues in the Mackenzie area. According to a special report, several companies with warning signs on their accounts were never audited, allowing potential tax gaps to go unnoticed.

Auditors found that companies hosting concerts and other artistic events between 2022 and 2023 often didn’t file the required artist tax and VAT returns, even though they organized big, high-profile shows.

Many of these businesses were taxed based on what they reported themselves, without deeper checks, even if past audits had already flagged unreported income or VAT issues.

One example highlighted a company previously caught for irregularities like not issuing receipts, keeping cash in a “black bag” at the register, and even causing a power outage during an inspection, yet no follow-up audits were done. Another company that held 30 concerts had its VAT calculated only on rough estimates, instead of reviewing actual records.

What the Audit Service recommends

The report urges the Tax Department to focus on high-risk businesses rather than applying the same low-level checks to everyone. This way, the state can prevent significant tax losses.

It also calls for the upcoming tax reform to give the department the right tools to crack down on tax evasion more effectively and enforce rules consistently.

“With limited resources, it’s crucial to target audits where they matter most,” the Audit Service said, warning that otherwise the state could continue losing millions in taxes.