Cyprus: Finance Ministry Shuns Proposals To Impose Taxes On Private Investors' Stock Market Profits

Lorys Charambolous, Tax-news.com, Nicosia

15 March 2001

Cyprus's Finance Ministry was criticised this week by the opposition parties for refusing to even consider a proposal to impose a tax on all stock market profits. The proposal was raised at a House Finance Committee meeting by George Lillikas (AKEL), Marios Matsakis (DIKO) and Doros Theodorou (KISOS), who suggested that private investors should declare the profits they make from the Cyprus Stock Exchange and pay tax between 5% - 15% on them if they exceed CYP£6,000. Currently only companies are taxed on stock market profits.

Director general of the Finance Ministry, Andys Tryfonides, said a tax on profits would be impossible to enforce: 'There are practical difficulties and a lack of a legal framework to enable us go ahead with this. We don't have a watchdog mechanism to check on the details of every transaction. There used to be a five per cent tax on profits, but everyone avoided paying it. I'm afraid that's what is going to happen if we reintroduce this regulation,' he said.

The CSE said that it could provide information on particular transactions upon request but it could not perform routine inspections or conduct official reports. Christos Rotsas (DISY) claimed that 'investors have a duty to declare their profits and there are ways to make sure they do.'

Tryfonides' remarks prompted a strong response as Theodorou argued that it was the government's responsibility to impose policies that were fair and democratic. He said: 'The state isn't anyone's puppet, it's your responsibility to deal with any practical problems that might exist. You should look at what other countries do. If England, Italy, France, Germany and the US manage to implement a tax policy then we can too.'

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