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Cyprus

Football clubs VAT debts to be wiped off (Update 2)

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Some €19.5m in debt owed by football clubs to the state will be written off following a cabinet decision, President Nicos Anastasiades announced on Wednesday evening.
The debt concerns long-standing dues dating as far back as 1998.
The Cyprus football association (CFA) welcomed the government decision, saying it included past tax obligations up to the end of June, 2007.
The CFA said the write-off announced by the president was the object of a 2007 agreement between the association and the administration of then president Tassos Papadopoulos with the aim of helping clubs take part in European competitions but also to be consistent towards tax authorities.
The association suggested that the president made a mistake in that almost the entire amount concerned inland revenue and not VAT. However, in his announcement during an event to mark Apoel FC’s 91 years, Anastasiades said VAT and other tax obligations.
According to the CFA, football clubs had assumed, from July, 2007 onwards, to pay their taxes, “something they have been doing, although some dues have accumulated since, for which there is a discussion at the moment with the finance ministry for a settlement.”
In his 2015 report, Auditor-general Odysseas Michaelides said the cabinet had, at the end of 1998, approved affording clubs a grant to cover their tax and social insurance debt until that time, provided they would meet their future tax obligations in time.
In August, 2007, the cabinet approved another plan to help clubs repay their dues by offsetting state grants against state debts.
The main condition laid down at the time was that clubs should meet their obligations in the time set by law.
However, the state had to revisit the matter again in June, 2014, approving yet another plan in light of the banking crisis of March, 2013, that “made implementation of the previous plans difficult.”
The new scheme concerned debt amassed by top flight clubs between July 1, 1992 and December 31, 1998, which was frozen, dues accumulated between January 1, 1999 and June 31, 2007 were to be covered through state grants, as per previous plan, and those between July 1, 2007 until December 31, 2013, could be repaid with 60 monthly instalments provided that clubs would pay their current fees to VAT, inland revenue, and social insurance from January 1, 2014.
“Most clubs appear not have met their obligations for a number of years,” the report said.
In December 2015, football clubs owed the state €31.9m in taxes — €16.1m indirect, and €15.7m direct – the auditor said.
On top of that, tax debt amassed by football club companies was €9.6m, with €7.7m being direct taxes.
Finance Minister Harris Georgiades said the amount being written off concerned debt amassed before 2007.
“As part of a clean-up of public finances from such outstanding issues, we have decided to permanently write-off this old obligation that we were never going to collect per the decision of the government at the time,” the minister said.
Asked why the government did not write-off the debts of private citizens too, the minister said such decisions had been taken from time to time.
“At times, the state judges that old dues that are impossible to collect, should be written off,” he said, adding that there is an established procedure that also affects individuals.



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