The control services of the General Fiscal Directorate (DGI) have adopted a new strategy to combat tax evasion linked to the exploitation of works and paintings of art.
They are preparing to call in “external experts” to verify and value declared assets, which appear in the deductible inventories of accounting declarations. This approach is intended to counter the growing use of this method by taxpayers, particularly large corporations, to avoid paying taxes due.
According to informed sources quoted who spoke to Hespress, tax inspectors have received specific information concerning suspicious tax returns, including falsified documents on the value of artworks and paintings belonging to certain companies.
These documents included purchase receipts and valuation reports drawn up by auctioneers and art experts. Direct investigations by the auditors revealed that the amounts declared as deductible, presented as expenses linked to the company’s activity, concerned paintings of significant financial value.
According to the same sources, the tax authorities reacted to the taxpayers’ declarations by asking them for further justification, after informing them that the amounts deductible from accounting declarations, considered as expenses, had to be linked to the company’s activity.
As the purchase of art paintings was not part of their productive activity, such purchases should not be included in the expenses, with the exception of those used to furnish offices, within reasonable limits.
Tax auditors have examined the returns of certain companies that have deducted substantial amounts from their business accounts for the purchase of high-value art paintings.
The owners of these companies purchased works of art to furnish the offices of executives and managers, as well as meeting and event rooms, considering them to be part of the décor allowing their cost to be deducted as an expense. However, the price of some of these paintings exceeded MAD 700,000, or 70 million centimes.
According to the same sources, the audit was extended to taxpayers in certain professions, after information was received about their use of art purchases to save money.
The majority of them use cash and do not declare their actual turnover, saving in works of art to avoid depositing money in the bank and escape detection. Some buy artworks with a view to investing in them, waiting for their price to rise so as to make a profit.
Tax auditors have noted an increasing presence of corporate clients on the art market, seeking to make profits and speculate on prices.
In the past, tax auditors have encountered difficulties in valuing artworks, due to their lack of expertise and the necessary skills to determine the true value of this type of asset and verify the authenticity of the amounts entered in the declarations of suspect companies.
These companies call on experts in the field to guarantee the return on investment in works and paintings bought at low prices and kept to be sold at high prices.
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