Cyprus To End Import Tax Relief On Raw Materials

by Lorys Charalambous, Tax-News.com, Cyprus

01 May 2003

The Cypriot government has decided to end import duty relief on a wide range of raw materials whilst simultaneously lifting import duties on a variety of finished goods coming from the European Union as the government prepares to enter the single market.

However, it is expected to prove an unpopular move amongst many local producers who say it will force firms to relocate overseas resulting in redundancies and forfeited tax revenues for the government.

“The government says it wishes to attract investment in industry, but it takes all the wrong measures that can best be described as a stab in the back for us (local industry), which will force more people to relocate abroad, costing jobs and revenue for the state,” said Alkis Hadjikyriakos, Chairman of biscuit and cereal producer Frou-Frou (FBI) in the Financial Mirror.

According to the FM report, import duties will now be levied at rates varying between 3.2% and 69.2% in addition to extra levies based on calculations of the tonnage imported. This will apply to at least 24 raw materials and will result in a minimum 10% rise in costs for local industry.

Said the measure will cost his firm some CYP 150,000 ($287,000), though the total cost for Cypriot industry could run into many millions.

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