Spanish Tax Inspectors have put forward recommendations to legalize prostitution and trafficking of so-called “soft” drugs such as marihuana in a bid to better fight their adverse consequences whilst increasing income to the National Treasury at the same time. They consider that between both illicit activities a further 6.000 million euros may be collected by the National Tax Office (AEAT) each year.

A number of new tax reforms have been proposed to combat illegal activities so to recap the biggest shockers mentioned previously, the following reforms are in motion:

1. Legalization of prostitution and trafficking of soft drugs to increase contributors on the Social Security system as well as fighting  corruption and mafias often associated with both illegal activities.

2. To remove 200 and 500 euro bills from circulation to hinder an ever prevalent underground economy. In addition, they advocate raising the current threshold for tax fraud from 120.000 euros to 600.000 euros  as well as requesting prison sentences even in those cases where the outstanding amounts are paid off or if the offender does not have a prior criminal record which would mean a series of modifications to the Civil Code.

3. One change many would agree with is separating the Tax Authorities from any political interest and in so doing, it would allow politicians to be monitored more closely where public spending is concerned. With increasing concerns over corruption and public funds, this particular reform would not allow civil servants to be affiliated to any political party.

Tax Reform

4. Payment by credit card may be enforced for certain activities such as taxi services where cash payments cannot be monitored or traced. By restricting cash payments they feel that it would be easier to exchange information with the tax office and organisms that fall under the national Social Security’s jurisdiction. At the same time, the have proposed that certain cash expenses should no longer be considered tax deductible.

5. One idea that may prove popular is the creation of a debtors list that can be accessed by all so that any citizen may be advised of anyone who has invoices pending payment in favour of the tax office from a certain amount.

6. To integrate the National Tax Office’s computer system with state, autonomous and local systems to better contrast information

These make up a few of the points to be discussed by the 20th June 2014 when the tax reform is set to be approved. Some may prove to be more popular than others but the majority will be seen as a not-to-subtle attempt to control the nation’s movements (the idea of enforcing payment by credit card for taxi services for example) or a selfish means to an end (legalizing prostitution and trafficking instead of combating these illicit activities head on can be viewed as a controversial move).

What is your opinion? Do you think these reforms are necessary to bring about transparency or is it another sly and greedy way of collecting more tax money? Feel free to leave your comments…

About Sabrina L. Williams

Although I was born in the UK, I moved to the Canary Islands, Spain at a young age and I haven't looked back. The Canaries is a fantastic place to live, I mean you can do all types of outdoor activities practically all year round because of the great weather. Horses are my poison but the islands are also a superb spot for water sports so they do attract a lot of attention from people around the world. Anyway, enough about that. Back in 2011, I made one of the biggest, scariest yet best decisions I'd ever made and set-up my own business in the middle of a recession. I love what I do as no two days are the same, plus Spanish law keeps me on my toes as it is constantly changing (often without warning!) so there is always something new to learn. As I've branched out in the world of Administrative Consultancy, I decided to create a blog to discuss topics of interest to others in my industry and my clients, share tips and experiences, to see what new ideas people have for improving their businesses and the like so I hope you'll find the time to join me on this venture...

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