Proposal of Finance Minister on corporate tax raise turned down, KEBE chairman announces

A proposal by the Ministry of Finance to raise corporate tax from 12.5% to 15% was turned down on Wednesday by the Cyprus Chamber of Commerce and Industry (????), the Employers and Industrialists Federation (OEB), the Cyprus Investment Promotion Agency (CIPA), the Cyprus Investment Funds Association (CIFA), the Cyprus Bar Association and the Institute of Certified Public Accountants of Cyprus (SELK).

Representatives of the six organizations convened on Wednesday at KEBE headquarters, in Nicosia, to discuss the proposal. After their meeting they called on the Minister of Finance to revoke his proposal, warning over its negative impact on the country’s credibility.

The Ministry’s proposal that was leaked to the media yesterday foresaw an increase in corporate tax and proposed other tax cuts as an offset.

The six organisations of KEBE, OEB, CIPA, CIFA, the Cyprus Bar Association and SELK had an expanded joint meeting during which we examined the proposals of the Minister of Finance with regard to the reform of Cyprus’ tax system. The six organisations unanimously reject the Minister’s proposal to increase corporate tax from 12.5% to 15%, KEBE chairman Christodoulos Angastiniotis said after the meeting.

He called on Harris Georgiades to revoke the proposal today, saying it is already damaging the country’s prospects.

Angastiniotis said that a tax reform could be discussed after a serious study will have been conducted and it should aim at reducing taxes paid by all the companies that are based in Cyprus and at the same time at increasing the country’s prospects for growth. Such moves, he added, should be examined seriously before they are laid on the table to avoid being considered a country with an unstable tax environment.

KEBE chairman also said that there was no pressure from Cyprus’ European partners for such an increase, noting that countries like Ireland and Bulgaria have a lower corporate tax while others mull over its reduction. But we believe that if the Cypriot economy has any vulnerabilities which of course are not linked to the level of tax but to compliance, we should examine those rather than make moves that will damage the prospect of the Cypriot economy, he added.

He also said that they are not planning to submit a counterproposal to the Minister, but they are ready to discuss a tax reform at the right time, under the right conditions in order to maintain a credible and stable environment, implement reforms that will reduce costs for both local and foreign companies that operate in Cyprus and give the country’s economy a prospect for growth.

OEB chairman George Petrou said the proposal has caused worry especially abroad and that they have been already receiving negative messages. Our credibility as a state has been damaged once again, he said.

SELK chairman Demetris Vakis noted that a tax policy should reduce the overall cost for companies in the long term and contribute to the development of entrepreneurship both by local and foreign companies.

CIPA chairman Michalis Michael said the proposal was ill-timed and noted that over 55% of taxes in Cyprus are paid by foreign companies and for this reason the proposal does not seem to be in the interest of Cyprus and its economy.

Source: Cyprus News Agency