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Estonian Tax, Customs Board wants to monitor all individuals’ and cos’ bank accounts

The Estonian Tax and Customs Board wants the Finance Ministry to enact a law that would essentially grant them access to the data of every individual’s and company’s bank account, allowing them to uncover unpaid taxes, whereas the Banking Association opposes the plan, Postimees reports.

Until now, Estonia has upheld the principle of banking secrecy, meaning that government agencies can access an individual’s or company’s bank account data only when there is a specific procedure underway, such as a tax audit by the Tax Board or a criminal investigation. Now, the Tax Board wants to regularly screen transaction data from all individuals’ and companies’ bank accounts to ensure that no one is evading taxes.

Raili Roosimaa, deputy director general for taxes at the Tax and Customs Board, said that, in order to make tax collection more efficient, the tax authority has recommended that the legislature provide it  with additional analytical capabilities.

“More specifically, we want to introduce mass data of financial flows from bank accounts into our risk analysis. In short, the Tax and Customs Board wishes to gain an overview of general financial flows, rather than individual transactions. Whether and how the Ministry of Finance will provide us with this opportunity at the legislative level, is something they can comment on,” Roosimaa said.

The Finance Ministry said that one of the priorities in the current budget situation is to efficiently collect the taxes due by law.

“For this, the Tax and Customs Board needs good quality information that can be used in risk analysis to reach the taxpayers with a higher risk of tax evasion with greater accuracy,” Evelyn Liivamagi, deputy secretary general at the Finance Ministry, said.

“We are looking for the optimal way to amend the law so that the Tax and Customs Board can obtain better information. This certainly does not mean transmitting all companies’ data quarterly. Work in this regard is still in its early stages, and we have just started drafting a respective bill, which we hope to complete by the fall. Specific proposals must be well thought out and precisely targeted so that companies’ data in banks are as well protected as possible, and the Tax and Customs Board receives just as much information as necessary to improve tax collection.”

When looking at what kind of mass data and aggregate information the tax authority wants to obtain from individuals’ and companies’ accounts, it becomes clear that there nothing is anonymized, and essentially, every individual’s transaction will be scrutinized.

“In risk analysis, we want to introduce mass data of financial flows from bank accounts into our risk models, both concerning natural persons as taxpayers and legal persons as taxpayers. In short, the Tax and Customs Board wishes to gain insight into general financial flows, rather than individual transactions,” Roosimaa said.

According to Roosimaa, individual transactions will also be examined if necessary.

“If risk models identify anomalies or risks of tax fraud, then, of course, it must be possible in the procedure to link them to the specific individuals. However, if a tax procedure has been initiated regarding an individual or a company, then, under the current law, we can already obtain information from the bank about individual transactions,” she added.

Enn Riisalu, representing the Estonian Banking Association, rejects the tax authority’s plan.

“The Tax and Customs Board has presented the Banking Association with a targeted data exchange model aimed at enhancing the detection of tax risks associated with both individuals and companies. The Banking Association does not support the implementation of the data exchange model in its current form,” he said.

Riisalu noted that there are more than enough reasons for rejecting the proposal.

“Conceptually, this is a completely new approach that needs to be analyzed in terms of banking secrecy, protection of personal data, intrusion into private life, proportionality of measures, administrative burden, and associated risks. Among other things, it is necessary to clarify whether such intervention is legally permissible, necessary, and proportionate. It is important to assess the associated risks as well. If, after the analysis, the desire persists to proceed with the proposals, then public discussion is necessary to determine whether the changes needed to implement the proposals are acceptable to society,” he added.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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