By Peter Stevenson
CYPRUS is not currently in a position to comply with EU regulations concerning tax fraud and could find itself in deep trouble if it does not conform, according to the director general of the inland revenue department (IRD).
Speaking at the House Foreign and European Affairs Committee, Giorgos Poufos told MPs that Cyprus had no other choice but to implement the European Council’s decision on May 22 by taking measures regarding tax evasion and fraud.
He demanded that discussions begin immediately for the required legislation.
Poufos added that the IRD did not currently have the operational capability, the manpower or the technological infrastructure to respond to the current requirements. He requested the department receive additional funding so it can meet its requirements.
The committee decided that discussions be transferred to the House Finance Committee so any legislative implementation could begin as soon as possible.
According to Poufos, countries that are receiving financial aid from the EU have no room for manoeuvre when it comes to enforcing stricter measures against tax fraud.
“Although there is time to draw-up a plan, the sooner we begin working hard the less likely it will be that we will face any repercussions,” he said.
“These new circumstances will have a wide-ranging impact and we will definitely see negative repercussions but that doesn’t mean something positive cannot come from it also,” Poufos said.
He explained that each country would be tasked with creating a black list of those guilty of tax fraud or evasion.
Poufos met President Nicos Anastasiades earlier in the day to discuss the new bill and revealed that a quarter of the revenue Cyprus was required to collect under the provisions of the bailout agreement would come through the IRD.
“After the haircut on deposits and the situation within the banking sector, the state is experiencing the same level of difficulty in collecting taxes owed to it as all other creditors on the island,” he said.
Poufos will meet the relevant European commissioner on June 10 along with his counterparts from the other member states to update him on the plan’s progress.
Vice-chair of the House Foreign and European Affairs Committee Prodromos Prodromou said that the handling of money laundering in the coming years would completely change the tax structure of the economies in European countries.
Prodromou said each country had three years to conform to the new regulations but expressed the need for Cyprus to get up-to-date as soon as possible to avoid last minute panic.
“The aim of all member states is to prevent international tax avoidance and evasion otherwise there could be serious repercussions which could affect Cyprus, without necessarily meaning we are responsible for tax fraud of some kind,” he said.
Prodromou added that this did not mean there would be a ‘Big Brother’ of sorts watching over all the economies of Europe.