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Cyprus

IPT changes pushed till after the summer

By George Psyllides

Discussion of a government proposal to integrate state and municipal immovable property taxes (IPT) has been pushed till after the summer holidays to give parties time to discuss it.

The government has proposed one IPT with a 0.1 per cent rate across the board on 2013 property evaluations.

“We should not approve any integration or any other reform of real estate tax if the government proposal does not include a reduction of the tax,” DIKO chairman Nicolas Papadopoulos said. “This tax is crippling and creates a problem to efforts to restart the economy,” he added.

The delay will not go down well with cash-strapped municipalities, which were not so keen on the idea anyway.

They say they could be forced to send out the tax forms anyway, based on 1980s values, the state of affairs to date.

But doing so would exclude around 30 per cent of properties, included when the government updated its records as part of the new evaluation.

There were also warnings from the tax commissioner that his department would need four months to collect the tax.

Interior ministry data showed that the state collected €104m in IPT last year out of €135m worth of bills sent to property owners.

Local authorities collected €13.7m of the expected €17.7m. They worry that taking their power to collect their own taxes would mean less revenues for them.

“Regarding … concerns relating to IPT revenue, there is a cabinet decision for full and timely payment through an increased state grant,” Interior Minister Socratis Hasikos said.

Main opposition AKEL was not convinced. MP Yiannos Lamaris said parliament did not have time to hear all the views before the summer break on Thursday.

“The integrated tax rate is totally unfair because it makes no distinction whatsoever between high, medium and low incomes, those who own a lot of real estate, those with little, and those who only have a home to live in,” Lamaris said.

DISY MP Prodromos Prodromou confirmed that discussion on IPT would continue after the summer holidays but a host of other measures designed to stimulate growth would be put to the vote on Thursday.

They concern various tax incentives announced last week, and reduction of transfer fees on property sales.

The basic reforms include tax breaks to encourage the flow of new capital in businesses, introduction of ‘non-domiciled resident’ status to attract foreign entrepreneurs and rich individuals, and full exemption from the capital gains tax of any future sale of immovable property acquired between the day the law is enacted and the end of 2016.


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