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Cyprus government revenues cut by property market crisis

The unprecedented crisis in the Cyprus property market and the problems faced by businesses have pushed government revenues down sharply.

THE unprecedented crisis in the Cyprus property market and the problems faced by businesses have pushed government revenues down sharply.

According to the Finance Minister, Charilaos Stavrakis, “the pressures focus on the capital gains tax due to the dramatic drop in the sale and purchase of houses and properties“.

Unfortunately, pressures are exercised on other sectors too, such as the corporate, due to the lower profits and the extraordinary contribution for defence, which reduces dividends due to the lower profitability“, the Minister said.

According to a StockWatch article, the Ministry expects that the fiscal deficit will reach 0.8% in 2009 and will be expanded by the end of 2012.

Due to the economic slowdown and the pressures on government revenues from Value Added Tax and the Inland Revenue Department, the government has lowered its expectations for a collection of older taxes of €100 million.

Finance Minister wants more revenue and an end to tax evasion

Speaking with the Manager and other officials of the Inland Revenue Department after his meeting, Mr. Stavrakis said that the government managed to collect €82 million from the delayed taxes (the target was €50m). This sum contributed to the good performance of the public finances in 2008.

Mr. Stavrakis also explained that the taxes collected by the Inland Revenue Department make up €2.1 billion of the total government revenues of €7 billion. “This means that those taxes represent a significant percentage of the total government revenues“, he added.

According to the Minister, the government has intensified its efforts and has introduced a team that visits the 20 biggest tax payers in Cyprus. The Minister also plans to meet the trade unions and the parties in the next few weeks so as to discuss the arrangements that must be submitted to Parliament for the elimination of tax evasion.

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