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Special unit for tax dodgers

In the wake of yesterday’s report about the thirty two property development companies that have yet to settle their large Immovable Property Tax bills, the government is planning a special unit to deal with tax dodgers.

THIRTY two legal entities owe the government a total of €10.6 million in unpaid immovable property tax (IPT) for 2013, reports said yesterday.

The 32 companies form a comprehensive list of ‘over €100,000 owed in IPT’ on November 30, 2013, a list which was requested by Parliament and provided by the Inland Revenue Department (IRD) on Wednesday.

The vast majority of non-payers are land development and construction companies, who had fervently protested the passing of IPT legislation as delays and bureaucratic difficulties in transferring deeds of ownership on properties sold would mean that they would need to pay IPT on properties already sold.

In a letter to Parliament, IRD head Giorgos Poufos stated that all outstanding cases will form part of legal proceedings against the companies in question, scheduled to be initiated on January 15, 2014 if the debts were not paid by then.

However, in some instances, such as that of Lanitis Development Ltd with a total of €483,192 in IPT due, a payment settlement has been negotiated since November 30. Such cases will be exempted from prosecution.

Poufos went on to explain the procedure after the commencement of legal proceedings, stating that following the court’s decision a ‘memo’ may be placed on the properties in question, meaning that the owner may suffer encumbrances relating to the property until such time as the debt has been settled.

An officer at the IRD explained yesterday that the reason only legal entities were listed on the leaked document was that no natural person’s IPT dues exceeded €100,000.

Commenting on whether people who have bought their property but have not yet received their title deeds may suffer legal entanglements due to non-payment by the company that sold them the property, IRD officer Irini Danou explained that “while theoretically possible, it is unlikely as other cases with similar causes will have been adjudicated before final court decisions are made on these issues”. She cited for example, instances of un-transferred properties mortgaged twice – by the developer as well as the buyer – where one or both loans have defaulted.

The leaked list names – powerhouses of the Cyprus economy – include, along with Lanitis Development Ltd, construction giants Aristo Developers with a total amount owed of €2.37 million, and Pafilia Property Developers with a total due amount of €1.24 million.

In a statement late on Thursday, the Cyprus Land & Building Developers Association claims to have been unfairly targeted and point out that “the vast majority of the Association’s members have complied with their property tax obligations.”

Also included are Orphanides Public Company (currently in liquidation) and semi-governmental organisations Cyprus Land Development Corporation (CLDC) and Cyprus the Sports Federation.

The latter’s deputy director Vasos Koutsiountas denied that IPT was left unpaid.

“We are in contact with the Inland Revenue people. We’ve exchanged letters recently and have not been notified of any outstanding debt,” he said describing the organisation’s name on the list as “very strange.”

The organisation said it was unfairly included in the non-payers list given that nearly all of its properties were classified as sports facilities, which are considered to be public utilities and as such are exempt from taxation by a cabinet decision since 1992.

However it added that following EU accession it was unclear whether the 1992 exemption still stood. It is lodging an appeal in any case.

The list also includes two construction companies in which Christakis Giovannis, Famagusta MP with AKEL, has a personal stake. “These are instances of property sold and paid for, but for which title deeds have not yet been issued,” Giovannis said. “It is absurd for land developers to be asked to pay a tax on property that has been sold years ago,” he said.

Giovannis claimed that “the truly meaningful document was the deed of sale; title deeds”, the means by which property taxation is determined, he said.

Special unit for large tax debtors

Readers' comments

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  • @GermanSixth – Governments have been making these vacuous announcements for years and have done very little.

    Perhaps you can understand why Cyprus’ banks are in such a complete mess.

  • GermanSixth says:

    Citation: “She cited for example, instances of un-transferred properties mortgaged twice – by the developer as well as the buyer – where one or both loans have defaulted.”

    Fascinating. Usually, mortgages have ranks. Usually, no bank allows mortgaging (a property) with a low(er) rank. For the banks, it is essential to know what they have in their books.

    Or am I wrong?

    And what is this?

    Law reform hopes to clear up Cyprus property title deeds trap

    It seems that the problem was recognized a long time ago. So, no attempts were made to address the problem within a law?

    Incredible.

  • @Smith – Anyone receiving a demand for Immovable Property Tax from their developer should read this letter from the Interior Ministry – and if necessary, give their developer a copy.

    If they pay their developer without having received this information, there is no guarantee that their money will be used to pay Immovable Property Tax.

    Furthermore they will be unable to reclaim any legitimate overpayments of IPT they may have made once the deeds to the property have been issued and registered in their name.

  • Smith says:

    We have purchased a property from a developer on the list. We do not have our Title Deeds. The developer is now asking us to pay the IPT. We are concerned about paying the developer when we do not have our deeds. Could we be in trouble for not paying?

  • UBoat says:

    “In a statement late on Thursday, the Cyprus Land & Building Developers Association claims to have been unfairly targeted and point out that “the vast majority of the Association’s members have complied with their property tax obligations.”

    This reminds me of the MASH potato advert men, “When mash gets smash” As the Cypriot Developers association are sat around the table, dreaming up more ways to extort money from innocent people.

    My Developer Chacholis is on this list. I should have known……
    Thanks for making my Christmas.

  • Mike says:

    “In a statement late on Thursday, the Cyprus Land & Building Developers Association claims to have been unfairly targeted and point out that “the vast majority of the Association’s members have complied with their property tax obligations.””

    Of course they have, please pass the smoke and mirrors, I want to try that trick!

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