Kyprianou Defends Partial Lifting Of Banking Confidentiality
by Lorys Charalambous, Tax-News.com, Cyprus
10 December 2003

Cypriot Finance Minister Marcos Kyprianou last week defended the government’s decision to partially lift banking confidentiality, after critics argued that the measures, intended to root out tax evasion, were too severe.

George Hadjianastasiou, chief of the Commercial Bankers Association, told the Cyprus Broadcasting Corporation on Monday that the government’s policy was too heavy-handed and warned that capital will eventually flee the island as a result.

However, addressing the House Finance Committee last Friday, Kyprianou criticised the banks for being uncooperative towards the Inland Revenue when the latter requested information on accounts for tax purposes, and assured them that the information sought by the tax department is being used solely for purposes of investigating tax evasion.

The minister also suggested that a proposed tax amnesty, offering a reduced 5% tax for those revealing details of undeclared accounts, would be impossible without at least a partial lifting of bank confidentiality.

“Taking into consideration the need for various exceptions that concern foreign capital which does not concern us since it is not taxed here, two measures must be taken: a special arrangement to tax secret accounts and end their existence, but, to avoid their reoccurrence, there must be access to accounts,” announced the Finance Minister.

Kyprianou is to meet with Central Bank officials and likely beneficiaries of the amnesty scheme before any decision is made to go ahead with the measures. However, the Finance Committee has discussed the possibility of extending the proposed amnesty period from three months to six months.

.