Cyprus Mail
Cyprus

Tax reporting overhaul needed for entry to OECD forum

A negative review of the tax department by the Organisation for Economic Co-operation and Development’s (OECD) Global Forum for transparency and exchange of information, which aims to tackle tax evasion and tax avoidance, has excluded Cyprus from the convention of mutual administrative assistance in tax matters, it was reported on Wednesday.

According to local daily Phileleftheros, until Cyprus is assessed as being fully compliant with the Global Forum’s recommendations, the 49 countries it has already signed mutual information-sharing agreements with are not obliged to respond to its requests for information on tax-residents of Cyprus.

Although Cyprus ratified the automatic information-exchange agreement into law in 2014, a peer-review assessment earned Cyprus an overall ‘largely compliant’ rating, attaching recommendations in areas of improvements.

The aim of the agreement is for tax authorities in each jurisdiction to have the full picture of every “reportable” individual or company’s assets in other jurisdictions.

In light of the negative development, the finance ministry asked deputies on the House finance committee to approve an €80,000 expenditure for a risk-assessment study, in compliance with the Global Forum’s recommendations.

The study, it was reported, will identify risks with regard to record-keeping at the Tax Department.

Along with the funding request, the ministry shared a letter by tax tsar Yiannis Tsangaris explaining the need for the study.

“In order to recall the [Global Forum’s] reservations, our side is expected to submit a plan of action based on its recommendations,” Tsangaris said.

“In addition to directly impacting the overall image of the tax department and Cyprus, a positive review would also weigh on the decision of other signatories to the convention of mutual administrative assistance, whether to share information with Cyprus or not.”

The risk-assessment study is one of several scheduled actions, Tsangaris added, and warned that tenders to conduct it must be invited as soon as possible.

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