Cyprus Parliament Assembles Agenda After Elections

by Harry Charalambous, Tax-News.com, Cyprus

14 June 2001

Post-election Cyprus political manoeuverings in the divided parliament have centred this week on the appointment of parliamentary spokesmen and the chairmanship of House committees. After two three-hour meetings yesterday, opposition right-wing party DIKO chose their vice-chairman Nicos Cleanthous as their new parliamentary spokesman, and after another marathon debate, right-wing coalition partners DISY narrowly opted for Demetris Syllouris over Prodromos Prodromou.

Marcos Kyprianou will stay on as chairman of the House Finance Committee, one of four committee chairmanships handed to DIKO. DISY, who secured 19 seats in the May 27 elections, are to chair six committees.

The government's tax reform package and stock market related bills are set to top the agenda of the House Finance Committee (HFC), and it is expected to get to work quickly following remarks made by Finance Minister Takis Klerides over his intention to submit the government's tax reform package as soon as the House committees are formed.

The most important feature of the government's planned tax reform package is the proposed hike in the Value Added Tax (VAT) rate from the current 10% to 13%, coupled with a cut in the corporate tax rate and the abolition of the defense tax. Klerides is also proposing to increase the minimum tax free salary to CYP 8,000, in accordance with his claim that the overall package does not amount to an increase in state revenues, but is designed to align the island's tax regime with that of the EU.

Other pressing issues that will dominate the HFC agenda are a proposal to slash or scrap the transaction tax on all CSE trades, as pledged during the election by most political parties other than DISY. A rule to oblige listed companies to report quarterly basis is expected, and provisions to allow the CSE to proceed with the listing of offshore funds.

Much of this legislation is driven by the EU accession agenda, which is also resulting in major changes to competition law and the consumer protection regime. The Government's Legal Service and the Trade Ministry are busy with legislation to enforce compulsory presentation of prices on all products, including an indication of unit costs that would better inform and facilitate comparisons for the consumer.

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