Filenews 10 May 2024 - by Angelos Angeodimou
Finance Minister Makis Keravnos outlined the seven objectives of the tax reform, noting that the project is expected to be completed in the 1st half of 2025.
More specifically, as Mr. Keravnos said during the presentation of his ministry's work during the first year of Christodoulides' government, the new tax proposal must weigh the modern economic model of the economy and the evolutionary prospects.
Defining the objectives, the minister said that these are:
⦁ Improving competitiveness within the framework of international and European standards.
⦁ The reduction of tax evasion and avoidance.
⦁ The new system should be transparent and simplified, without bureaucracy.
⦁ Be encouraging towards business and at the same time socially just.
⦁ Be a mechanism for improving equal distribution of income.
⦁ Not to threaten social cohesion and to encourage investment activity.
⦁ Be fiscally neutral and stable.
Green taxation: An important part of the tax reform is green taxation, which will be imposed on fuels. In recent statements, Finance Minister Makis Keravnos said that Cyprus' obligations under green taxation will be implemented in the autumn, while in a corresponding report the President of the Republic noted that green taxation is expected to be imposed towards the end of the year. In particular, fees on fuel, water, hotel accommodation and waste are some of the taxes already in the works for a green transition.
The Finance Minister pointed out that the burden of green taxation will be very small (at least for 2024), while the benefit for citizens is huge, underlining that compensatory measures will be implemented at the same time as green taxation. "For example, the carbon tax on motor fuels will be 5 cents per litre and will generate total revenues of €52 million. The €19 million will come from businesses and €33 million. They will come from households." He indicated, however, that "all this money will be returned back to citizens in various forms.
–Discounts for businesses: The introduction of increased tax deductions to encourage the energy upgrade of businesses, including measures related to electric vehicles, is foreseen.
Specifically, an increased capital discount of
⦁ 7% is granted for capital expenditure incurred within tax years 2023, 2024, 2025 and 2026 to improve the energy performance of buildings.
⦁ 20% for machinery and equipment connected to RES systems as well as technical energy efficiency improvement systems.
⦁ 33.3% for new commercial motor electric vehicles as well as taxis and buses.
A national target is to reduce emissions by 32% by 2030.
