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Cyprus Disputes "Non-Compliant" Tax Rating

by Lorys Charalambous,, Cyprus

29 November 2013

Cyprus has hit back at an assessment that the country is "non-compliant" in relation to international standards for transparency and information exchange, arguing that the rating is based on outdated information.

The Organization for Economic Co-operation and Development's Global Forum on Tax Transparency and Exchange of Information recently released compliance ratings for 50 jurisdictions at a meeting in Jakarta, based on an assessment of legal and regulatory frameworks in the jurisdictions and how these are implemented.

In a statement, Cyprus's Finance Ministry claims that the rating does not take account of changes in the law that were implemented in 2012. The Ministry highlights that the law now requires that information on trusts should be made available, and that provisions have been removed that allowed for the issue of bearer share warrants in public companies, and for companies that are Cyprus-incorporated but not tax resident, to avoid filing tax returns.

As regards information exchange, the Ministry acknowledges that there were delays between mid-2009 and mid-2012, but explains that this was due to there having been more than 4,000 requests for information and that "personnel, procedures and capacity" have since been "significantly enhanced."

The Ministry further explains that a low compliance rate for filing tax returns has been in part due to uncertainties over the number of active companies on the island, as the total has been artificially inflated.

The Ministry therefore argues that it ought to have been assigned a higher rating, but that assessors during the next review stage, in 2014, will see significant improvements in all the parameters being measured. It adds that coordinated efforts are being made by the Ministry of Finance, the tax authorities, the accounting and legal profession, the Cyprus Securities and Exchange Commission and the Companies Registrar.

TAGS: compliance | tax | tax compliance | tax avoidance | ministry of finance | Cyprus

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