Filenews 8 June 2021 by Theano Thiopoulou
Reforms in the Cypriot tax framework also signal the debate at the highest international level on the imposition of a global minimum corporate tax, but operators of the Cypriot market remain reassured about the impact that can be caused on Cyprus.
The first reading of the G7 agreement, made last week, is based on two pillars and one is of direct interest to Cyprus. It commits states to a global minimum corporate tax rate of 15%. The G7 decision will be discussed next month by the G20, the 20 most economically powerful countries in the world. Consultations will also take place at OECD and EU level. A process that takes its time, but already the ground has been prepared.
The CEO of the audit firm PwC, Eugenios Eugenios, in statements to "F" put on the table for reflection the redesign of the tax system of Cyprus. "The G7 decision is part of a wider debate at EU level, as well as THE OECD, on tax issues. It is a fact that the pandemic will leave behind high public debt, while at the same time widening the inequalities that already exist. In addition, there is a view that the way of taxation should be consistent with the current situation of the international economy, dominated by technology companies. The G7 decision creates momentum in the global debate to create a new international tax framework. But there are many issues that need to be clarified and discussed at G20 level and then at EU level. For Cyprus there is no immediate concern about this development, but 20 years after the last tax reform, we should start redesigning our tax system, acting pre-actively and in an orderly way. In this light, we should look at all issues, with an emphasis on effective taxation and in such a way as to ensure that our tax system boosts growth and at the same time responds to today's social, economic and international data," said Mr. Eugeniou.
Reassuring is the OEB, which has changed its stance since 2019. In August 2019, former Finance Minister Haris Georgiadis, in a meeting with business bodies, discussed the idea of increasing the corporate tax from 12.5% today to 15%. The former minister's proposal seems to have fallen like a thunderbolt in the air, since the tax reform proposals that have been on the table in recent times did not refer to a change in the tax rate.
Today, however, the position of employers and industrialists is different. Indicative are the statements of the President of the OEV, Antonis Antoniou, according to which the tax rate increase to 15% will not be a disastrous development for Cyprus. He stressed the need for Cyprus to carry out the reforms needed to attract more companies. Mr Antoniou said that "Cyprus is an attractive destination" for businesses and "I do not see that we should be particularly concerned", as he noted, "the reforms that need to be made, in any case, to disbursement of funds from the EU".
The SEC in a communication states that this is a serious issue that must quickly concern all the social partners as a whole and collectively, which is why the Minister of Finance should convene the Advisory Economic Committee, which includes all the social partners at the highest level (government, employers, guilds).
