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Cyprus government set to increase property tax

Property tax increaseAPPROXIMATELY 1,800 property owners will be called to pay more for the properties they own via the promotion of a bill that seeks to collect up to €20 million per annum. The taxes of the rest will be adjusted at a later stage, when the Land Registry’s revaluation of all properties has been completed.

The bill for the taxation of properties is ready and is currently reviewed by the Finance Minister. It will be promoted to the Parliament within the framework of the package of fiscal consolidation measures and not as a supplementary measure as included in the Stability Program”, Interior Minister, Neoclis Silikiotis told StockWatch.

This measure is expected to facilitate the government’s negotiations with the trade unions since it is one of the demands that were allegedly made to President Christofias at a meeting held on Thursday for the state payroll.

According to the current ratios, all those who have properties of more than €427,000 pay tax of €3.5 per thousand and for values of more than €850,000 a tax of €4 per thousand is paid. However, those values are calculated on the basis of the 1980 prices. The problem with the state coffers is intensified by the fact that many developments are declared as plots or farms.

The government seeks to revise the taxable property prices but know that this will take time.

Since the revaluation of the properties will take up to 5 years, we decided to take an interim measure in order to correct the distortions and to increase the state revenues in this critical period of recession”, Mr. Silikiotis told StockWatch yesterday.

We decided to increase the tax ratio to 1,800 owners who have properties that cost more than €10 million. The government is expected to collect €10-20 million”, he said.

Mr. Silikiotis’ statements were made after similar statements by the Minister on Sunday, when he talked about a distortion in the property taxes.

We must correct a distortion and this will be achieved via the revaluation on the basis of the current prices”, he noted.

Taxation is based on the prices of 1/1/1980. According to a Land Registry study, the values have been multiplied by 20 since then. A property of €0.5 million, for example, today costs €10 million”, he stressed.

This means that he who has a property of €10 million pays only €1,300 per annum since calculations are based on the value of €0.5 million. Since it will take 5 years for the revaluations to be done, we have elaborated several scenarios for which there will be a minimum charge for the owners, especially those who are currently taxed”, the Minister said.

So far, seven thousand property owners are taxed, 1,800 of who hold properties that cost more than €0.5 million in 1980. This means that the state will be able to collect by the owners so that it deals with the negative impacts from the global economic crisis and the problems in the public finances”, he stressed.

Invited to state the exact revenues from the 1,800 owners, he said that the scenarios are many. “Revenues might range from €10 million to €20 million”, he added.

If the 1,800 owners are charged with an average of €5 thousand each every year, we talk about €10 million. And when we talk about €5 thousand, we talk about those who have properties of millions of Euros”, he said.

The values have been increased through projects such as the revision of the urban planning zones, public works, road works and other infrastructure projects. All citizens contributed to the increase in the value of those properties. Therefore, the state requests a minimum price to cope with the current difficulties”, he concluded.