Filenews 23 October 2022 - by Eleftheria Paizanos
The "lights" of the Commission are received by the Republic for the promotion of green tax reform, with the aim of gradually introducing the carbon tax on all fuels used in the sectors of the economy that do not fall under the Greenhouse Gas Emission Allowance Trading System. This is mentioned in the report on economic developments 2022 and the outlook for 2023-2025, although a few days ago Finance Minister Konstantinos Petrides said that, due to the developments, no new taxes will be imposed on fuel and the country will not submit the legal framework for green taxation at the end of the year.
According to the report, this taxation falls within the framework of the green transition. However, it is not stated when it is expected to be implemented, as the pandemic and the war in Ukraine have changed the situation. The carbon tax is considered one of the most effective fiscal tools to reduce gas emissions and its introduction in Cyprus will contribute to the country's compliance with the European Union.
In particular, the green tax reform will diversify the source of state revenues, by increasing the taxation of activities that consume natural resources or pollute the environment and by shifting the burden of taxation towards environmentally damaging activities. It is worth noting that the transition to a green economy is one of the most important goals - commitments in the national Recovery Plan.
On the road green bond
In addition, the issuance of a green/sustainable bond is being promoted. As estimated by the Ministry of Finance, the green bond as a financing tool attracts particular interest from international investors, which will increase interest in international capital markets for the Republic's issues and will expand the state's financing options with access to new investors.
Technical assistance for budget
Cyprus is in an open line of communication with the European Commission, from which it also receives technical assistance for the development of a "green" budget framework. According to the Ministry of Finance, the "green" budget is considered one of the most important tools that will offer the possibility of monitoring and evaluating, with full transparency, the environmental contributions of fiscal policies, with the aim of aligning them in relation to national environmental objectives. In addition, it will contribute to the green transition of the economy by reorienting public investment, consumption and taxation towards green priorities.
According to the report on economic developments, in the last two years, important legislation has been adopted to reform the country's tax framework, aimed at the aggressive tax planning included in the Recovery Plan. In addition, the strategy for attracting companies and talent to Cyprus was approved, which includes actions to optimize the procedures for obtaining residence and work permits for qualified personnel from third countries.
