Ruling Disy will on Friday be tabling eight bills aiming to incentivise individuals and corporations, with loans in arrears, to settle their debts.
The party unveiled its proposals during a news conference on Thursday, with party boss Averof Neophytou asserting that if enacted into law they would go a long way toward further reducing the stock of non-performing loans, a bane on the economy.
Seven of the bills pertain to the same incentives currently afforded to debtors, but which will lapse at the end of 2019. Under Disy’s legislative proposals the incentives are to be extended by another year.
In the case of property-for-debt swaps, debtors who settle their debt in this way will be exempt from paying property transfer frees, capital gains tax, income tax, corporate tax, stamp fees, VAT and the token defence contribution.
These measures have already had a significant impact, resulting in a decline in non-performing loans and thousands of loan restructuring deals with banks, Neophytou claimed.
In addition, Disy will be tabling an eighth bill.
Currently, where debt is written off as part of a loan restructuring agreement, the debt write-off is logged as profit on a corporation’s books and is thus subject to taxation.
Under the legislative proposal, such debt write-offs would not be considered profits.
The proposal will cover profits logged for the years 2017-2020.
“It will act as an additional incentive, helping small and medium sized business to settle their debts with banks and return to operation, to their own benefit and the economy at large,” Neophytou said.
In the long run, he argued, the temporary loss in tax revenues for the state would be more than compensated by the uptick in economic activity.