The Cyprus tax board is grappling with a series of operational issues that could undermine its efficiency, according to a House ethics committee session on Wednesday.

The committee met, following a request by MPs Dimitris Dimitriou and Irene Charalambides, to discuss concerns ranging from understaffing to the board’s lack of legal recourse in challenging its own decisions.

Committee chair Dimitris Dimitriou voiced strong support for the board, urging a resolution to the issue preventing the commissioner of taxation from legally challenging decisions he deems unjust. He also highlighted a “clear conflict of interest” as both the tax board and the tax department share the same legal advisor, the attorney-general’s office.

The debate intensified when MPs questioned the role of the attorney-general’s office in providing legal counsel to both the tax department and the tax board, a practice Dimitriou described as a direct conflict of interest. The Tax Board president, Kyriakos Georgiades, acknowledged the concern, stating that while the board cannot hire its own staff, it could consider employing non-public sector personnel if the legislature approves.

Another issue that surfaced was the tax board’s staffing shortages. Georgiades revealed that the board had only one secretary and one tax adviser, with the addition of a second tax adviser and secretary being deemed essential. He further explained that 75 new cases had been added over the past three years, bringing the total number of pending cases to 85.

The committee also discussed the board’s accommodation issue, with Georgiades confirming that the ministry of finance had requested that the tax board vacate its current building, as it is owned by the law office.

The matter of legal challenges was a central focus, with independent MP Alexandra Attalides expressing concern that an entity of the state should not be deprived of the right to challenge court decisions. Meanwhile, the commissioner of taxation, Sotiris Markides, underscored the difficulty of operating without the ability to appeal decisions he views as unjust.

The auditor-general’s report raised additional concerns, particularly regarding the tax board’s budget and outdated computer systems. Georgiades pointed out that the tax board operates with technology dating back to Windows 98, which has not been updated since 2017. He added that the board’s budget in 2023 was approximately €488,755, which includes staff salaries.

The debate also highlighted discrepancies in the number of cases related to tax evasion, with Andreas Kailas, a member of the tax board, noting a rise in such cases. He further emphasised that the tax board’s budget should include provisions for obtaining external legal opinions.

In response to calls for reform, MPs, including Dimitriou and Zacharias Koulias, stressed the importance of enhancing the board’s operations and increasing its capacity to address tax disputes efficiently. The committee expressed the need for an informed public awareness campaign to promote the role and importance of the tax board.

The discussion is set to continue, as lawmakers seek to balance the tax board’s capacity with the need for greater legal recourse, in the hope of safeguarding taxpayer rights and ensuring that tax matters are handled fairly and efficiently.