FINANCE minister Harris Georgiades yesterday outlined the main elements of tax reform bills submitted to parliament, noting that the system will become more attractive, fairer, and more effective.
The reforms were announced by President Nicos Anastasiades on Wednesday.
They include the reduction of transfer fees on real estate transactions by 50 per cent until the end of 2016 and the exemption from capital gains tax from the future sale of property, acquired until the end of 2016.
At the same time municipal property tax will be abolished and local authorities are to be compensated by €15m for 2015 to make up for their loss of income.
After local administration is reformed, Georgiades said, the subsidy given by the state to local authorities will be abolished and they will undertake to collect property tax, now done by the government.
“The tax reform we propose makes our tax regime even more attractive, fairer, and effective, and reconfirms the main political direction of our fiscal policy, which, through fiscal consolidation, rationalisation, and proper management avoids the need for new taxes,” the minister pointed out.
Referring to the immovable property tax, he said a tax rate of 0.1 per cent will be applied universally. Properties having to pay €25 or under will be fully exempt, a provision which according to Georgiades affects 12 per cent of property owners. People paying early will get a 10 per cent discount.
Inland revenue is expected to lose €21m from the measures.
He also said there will be tax deductions in fresh capital for businesses and announced an extension of a capital discount / depreciation for machinery, installations and buildings by the end of 2016.
At the same time, a new status of a “non domicile” is introduced aiming to attract business executives and people of high income to Cyprus, exempting such persons from paying certain tax obligations.