Cypriot Tax Revenues Boosted By Offshore Inflows

by Lorys Charalambous, Tax-News.com, Cyprus

01 November 2005

Boosted by capital inflows and deposits from offshore companies, tax revenues collected by the Cyprus Inland Revenue Department have risen by 8.9% year-on-year between January and September 2005, despite that fact that the Finance Ministry predicted a fall in revenues this year.

According to figures reported by the Financial Mail, tax revenues between January and September stood at CYP450.2 million (US$950 million). This compares to CYP413.3 million collected in the same period last year.

It is believed that the increase is largely the result of increased activity from offshore companies, which contributed to a 16.5% increase in corporate tax revenues to CYP146.2 million, and a 20.8% increase in the special defence tax, which is levied on corporate dividends and interest paid on deposits, to CYP81.7 million.

However, there was a decline in capital gains tax revenues by 2.3%. There has also been a 14.1% fall in revenues from the self employed - an area where the government is attempting to stamp out the under-reporting of income.

Nonetheless, the overall results came as something of a surprise since the Finance Ministry had forecast a 4% decline in tax revenues this year.

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