Cyprus Mail

House, unions seek to limit cabinet role in tax tsar appointment

Pasydy's Glafcos Hadjipetrou

By George Psyllides

CONCERNS WERE expressed on Monday over the appointment of a tax commissioner who will head a single authority after the integration of the VAT and income tax departments (IRD).

The House finance committee wants safeguards to be put in place to ensure the appointment of the commissioner would be done with technocratic criteria. Civil service union PASYDY said it would be unconstitutional for the cabinet to appoint the commissioner.

Finance Minister Harris Georgiades said ways will be explored to allay the parliament’s concerns, adding that the attorney-general has ruled that the relevant legislation was constitutional.

Creating a single tax authority is part of the structural changes included in the terms of Cyprus’ bailout.

The task entails integrating the VAT service with the IRD, but also strengthening the legal framework, simplifying procedures and optimising IT systems, the finance ministry said previously.

There is “better use of staff, better use of IT, and better operation in general,” Georgiades said.

The government bill provides for a five-year term for the commissioner and four years for a deputy. Their terms can be renewed once.

Finance committee chairman Nicolas Papadopoulos said one of the basic reservations concerned the risk of politicising the position.

“It raises concern at a time when there is heightened sensitivity about conflict of interest, about the dependence of political parties, and politics in general, on financial interests,” Papadopoulos said.

Papadopoulos said public interest would be better served if the term was limited because it curbed the risk of corruption.

PASYDY head Glafcos Hadjipetrou suggested that the commissioner could not be appointed by the cabinet; it was the job of the public administration commission, he said, adding that their legal adviser, former attorney-general Alecos Markides had ruled the bill unconstitutional.

“Everything will fall at the Supreme Court but the damage would have already been done,” he said.

Approving the bill by June 10 is a precondition for Cyprus to receive the next tranche of financial assistance.

Full integration is expected early in 2016. The unit dealing with big taxpayers should be up and running by the end of this year.

The reforms include a programme of short-term measures to enhance compliance, efficiency and effectiveness as well as a comprehensive long-term reform covering risk management and the establishment of a new integrated function-based tax administration structure, integrating the existing IRD and VAT services.

Short-term measures, to be in place by the end of this year, include enacting legislation to enhance tax collection and voluntary compliance by attributing personal responsibility for payment of company taxes, harmonising legislation among tax types so that not paying taxes is a criminal offence, and strengthening powers by the tax authorities to ensure payment of outstanding tax obligations, by having for example, the authority to seize corporate assets, and prohibiting alienation or use of assets, including property and bank accounts, by the taxpayer.

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