Cyprus Finance Committee To Review Tax Reforms

Lorys Charambolous, Tax-news.com, Nicosia

08 January 2001

After a meeting with the Cyprus Employers and Industrialists Federation (OEB) last week, Finance Minister Takis Klerides has confirmed that the House Finance Committee will meet to discuss the government's tax reform proposals.

The OEB is a pan-cyprian independent organisation officially recognised by the government as the voice of the Cypriot business community and as such advises the government on business matters. The OEB is made up of 40 main professional associations and 400 major individual enterprises in the manufacturing, services, construction and agricultural sectors of the economy.

Mr Klerides said that in his meeting with the OEB the organisation made suggestions which will be considered. He said: 'The OEB has submitted a document on the tax reforms and we will listen to their suggestions carefully. The exchange of opinions with elements such as OEB is very important to the form the tax reforms will eventually take'.

The tax reforms are an attempt to harmonize Cyprus' taxation system with the EU by raising the VAT rate and imposing other special taxes and duties. The government also proposes to do away with the defence tax and to increase the level of tax-exempted income. In order to fulfil the island's commitments under the Customs Union Agreement with the EU, all import duties would be brought into line with single market levels.

Further amendments to be discussed include providing incentives for mergers and acquisitions to create larger units; there will be increased charges for company formations; and an increase in road tax and tax on bank interest from deposits at source. But the overall aim of the reforms is to reduce the wide gap between the offshore and the local tax regimes.

Last month Tax-news.com reported that the Cyprus authorities claimed the island's international business companies could continue to thrive even without the special offshore tax rate. At a seminar organised by the Cyprus International Financial Services Association (CIFSA) at the beginning of November, Cyprus Central Bank Governor Afxentis Afxentiou explained: 'These requirements are not contrary to the best interests of international business enterprises ... Cyprus' advantages are not just in the arena of tax and duty free. Cyprus has many advantages that should more than compensate higher tax. The long term interests of the international sector will be safeguarded in the best possible way.'

.

Recommended

Write a comment