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Cyprus Stock Exchange and VAT Bills Delayed Again

Andrew Mair, Tax-news.com, Nicosia

23 May 2000

Bills dealing with the stock exchange and VAT reform have encountered futher delays as party politics once again took centre stage in Cyprus.
Last week the House Finance Committee agreed to delay debate of the VAT bill which proposes to increase VAT to 10% as the first step on the path towards Cyprus-EU tax harmonisation.

The delay was at the request of the Socialist and Communist parties who told the Committee that they were not ready to take a position on the bill yet, despite the fact that they have had months to formulate their policies.

Consensus, however, may be hard to find even once all the parties have stated their positions on the new VAT regime. Finance Minister Takis Klerides has made no secret of the fact that he is in no mood for compromise and any concessions will have to be paid for from cuts to the budget, which could in part explain the delaying tactics of the left wing.

The other important legislation which has been held up is the bill to reform the Cyprus Stock Exchange (CSE). Although this bill was passed by the Cyprus parliament earlier this year, it was rejected by the President and returned for re-consideration by the House.

Following last week's House Finance Committee meeting, it is clear that the long overdue and badly needed reform bill is at a standstill with the parliament and the government deadlocked over the details of the CSE reforms. With the stock exchange still growing at a healthy rate and new brokerages and companies applying to enter the market every week, another crisis over the CSE's listing and share certificate procedures is almost inevitable.

However, despite the lack of progress on reforming its procedures, the CSE remains bouyant and its new General Manager Nondas Metaxas is maintaining a positive outlook. The CSE has recently annouced plans to move to larger premises later this year and is in the process of concluding negotiations to establish a FTSE style index of the top 20 CSE companies.

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