Cyprus Stock Market Transaction Tax Is Good Earner For The Government But Not As Good As Last Year

Lorys Charambolous, Tax-news.com, Cyprus

28 March 2001

According to a report from the Cypriot news agency, Xak news, the Cyprus government has collected CY£3.7m in stock market transaction duties in the first quarter of 2001. The tax, which is automatically added as the transaction order is placed, is levied at 0.6 per cent of the transactional value for individuals and 1 per cent for companies.

The report states that the majority of the revenue was generated from transactions at the start of January which gradually declined to the last week of the quarter which yielded the least income for the state at CY£193,440 which analysts say reflects slumping volumes in 2001 - last year the state collected a total of £46.2m in transaction duties.

On frequent occasions stockbrokers have urged the government to reduce the levy or introduce a temporary suspension in a bid to boost the market but so far their calls have fallen on deaf ears. It is unlikely the government will consider taking such a step when it can prove to be so lucrative.

But at least the government realises that the transaction levy is as far as it should go for taxing investment activities as earlier this month it refused to consider a proposal to impose a tax on the profits that private investors make on the stock market with the director general of the Finance Ministry, Andys Tryfonides, saying it 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.

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