Cyprus Mail
Business Cyprus

New tax amnesty to lure back capital

By Elias Hazou

THE GOVERNMENT yesterday announced a new tax amnesty drive geared at luring capital back to a cash-starved economy.

People parking their money in tax havens abroad have a six-month window to take advantage of the amnesty ending December 31.

All those that are granted taxation amnesty would be exempted from income tax, government spokesman Christos Stylianides said after a meeting of the Cabinet.
But the offered amnesty is not a get-out-of-jail card, he stressed. It would be contingent on certain conditions and criteria being met.

For example, capital that is repatriated must be used immediately in ‘measurable’ investments or to settle obligations to banks or the state.

Alternatively, the money must be deposited in banks for a period of five years and (five-year fixed-term deposits) or be used for purchasing sovereign bonds.

The finance ministry and relevant departments, such as Inland Revenue, have been instructed to draft amnesty legislation and submit it to the Cabinet as fast as possible, preferably within the next fortnight, said Stylianides.

Responding to questions, the spokesman dismissed the notion that yet another tax amnesty might by seen by some as rewarding cheating and encouraging impunity while honest citizens pay their taxes.

Rather, he said, the measure is being taken due to the current extraordinary circumstances.

“We are in a difficult economic crisis and we need liquidity…this is a state of emergency,” he noted.

The spokesman was unable to provide an estimate as to the amounts of cash that might be repatriated. The finance ministry would look into it and furnish some numbers, he said.

It hasn’t been that long since the last amnesty was offered. In November 2011 parliament enacted legislation providing for the partial write-off of interest and penalties on overdue tax, provided that the balance was settled by 31 March 31, 2012.

The legislation applied to individuals and companies alike and afforded a waiver of interest and penalties in excess of 5 per cent of the principal amount owed. It applied to income tax, SDC tax, immovable property tax, stamp duty and capital gains tax for periods up to December 31, 2008.

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