Filenews 12 February 2025 - by Angelos Angelodimou
On February 26, the team of the Centre for Economic Research of the University of Cyprus will present its proposal for tax reform, in accordance with the mandates given by the Government.
The presentation will take place in front of a large audience, as the event is expected to be attended by groups from various ministries, which will be directly involved in the process of tax reform, representatives of the Parliament, given that after the presentation the process of preparing the relevant bills that should be forwarded to the Parliament will begin, as well as representatives of the social partners and other organized groups and professionals, who will be invited to submit their positions towards the proposal of the University of Cyprus.
Speaking to "F", George Syrihas, Economist and Consultant at the VIU of the University of Cyprus, noted that the proposal provides for a comprehensive tax reform, which will touch both households and businesses. As he said, various aspects of the reform are included in the proposal, such as the green transition, tax rates and other points. VAT is left out, as it was not within the orders given to them by the Government. Besides, he noted, VAT issues are directly determined by the EU.
George Syrihas said that after the presentation, the Government is expected to put the proposal to consultation in order to take the positions of the social partners and other professional groups and possibly, as he said, after seeing them, to proceed to some differentiations. Subsequently, the Government will prepare its final proposal and proceed with approval by the Cabinet and then with the preparation of the necessary legislation. The aim is to have everything ready by the end of the year, so that it can be implemented in 2026.
What had President said?
It is recalled that in the context of the presentation of the government's plan for 2025, the President of the Republic had stated in relation to the tax transformation: In 2025 we build on progress and continue with the same responsibility. This year is a milestone for tax transformation, which will be put to consultation in February. This reform increases household disposable income and supports the growth of Cypriot businesses. For households, tax breaks will substantially strengthen the middle class and will contribute, among other things, to tackling housing and the great challenge of demographics.
For Cypriot businesses, the President announced that there will be reductions in tax burdens, with the aim of increasing competitiveness and exports. It is noted that in his pre-election pledges, Nikos Christodoulides had talked about increasing tax-free income from €19,500 currently in force to €24,500.
It is noted that in previous statements, the President of the Republic had raised another issue, which the tax reform will attempt to address. That of the shadow economy. "I cannot accept that we have about 30% shadow economy in our country. I expect everyone's cooperation, it is also an objective of tax reform. You understand, if we can only deal with this phenomenon, the benefits that will arise for the economy," he noted.
Green tax and "no" from AKEL
The implementation of green taxation is expected in May, with the Government being in the final phase of preparing the changes, Finance Minister Makis Keravnos said yesterday. He specifically said that Cyprus is obliged to impose the specific fees, stemming from past commitments.
He noted that the deadline for the implementation of green taxation is until next May and that at the moment the Government is ready, in anticipation, as he said, of a "final touch on compensatory measures" to complete the bills under preparation. He also said that green taxation and compensatory measures will be announced at the same time.
AKEL, in its announcement yesterday, states that the previous Anastasiades-DISY government committed to these taxes, as it did not owe, through the Recovery and Resilience Fund. He adds that "while the current government of Nikos Christodoulides has revised and retabled the Recovery and Resilience Fund Plan, for incomprehensible reasons it did not renegotiate green taxes." AKEL argues that "citizens should know that green taxes are not our obligation towards the EU, since this has not been agreed at European level. The government should ask for a review of this measure and should not proceed with its imposition."
