Report Says Cypriot Companies Evaded Tax On Stock Market Gains

by Lorys Charalambous, Tax-News.com, Nicosia

25 July 2002

According to a report submitted by the Cyprus Stock Exchange Investigating Committee, hundreds of companies and possibly thousands of individuals failed to pay taxes on gains made from the CSE during the boom year of 1999. Vice Chairman Committee, Andreas Skordis, gave as an example a case in which two companies registered abroad by the same family “dumped” a huge package of shares in a CSE listed company and made CYP 23-24 mln, without paying any taxes.

Cyprus Finance Minister Takis Klerides told the House Finance Committee yesterday that about 2,500 persons are reported to have declared gains amounting to CYP 170 mln made during the same year, and that the Committee's report would be submitted to the Inland Revenue.

“We shall ask for an opinion from the Attorney General’s office as to how the findings of the report should be forwarded to the Inland Revenue, so that the whole process is legal,” said Klerides, adding that his Ministry and the HFC agree that all those who declare their 1999 gains by the end of 2002 should be charged at the 5% rate, rather than facing a 40% tax charge.

“This is to encourage the public to declare their taxes to reduce the burden on the Inland Revenue to conduct its own investigations,” said Klerides.

Until 1999, the rate of capital gains tax in Cyprus was 40%; then in 1999 it was reduced to 5%.

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