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Developers call for tax changes

Property developers have requested a change to property tax legislation voted by the House last year to avoid the injustices that occurred, CEO of Aristo Developers Theodoros Aristodemou said.

IN A LETTER to the House Finance Committee and political parties, Aristodemou claimed that the way the legislation was implemented “created serious distortions among taxpayers”.

He also said that the government agreed with the Troika to collect €130 million from property tax and noted that the fact that €2.7 million or 2% of that amount was retrieved from Aristo Developers shows the injustice of the legislation.

“I wish our company owned 2% of property in Cyprus and we would have paid double taxes, but in reality 2,263 properties worth a total of €720 million for which we are charged property tax do not belong to us and this also proves the enormous damages from collecting transfer fees by the state due to the intentional delay of property transfers,” Aristodemou said.

He suggests that in order for the taxation to become fair, all the properties with the same parameters and characteristics should be registered and the buyer/user should be taxed, provided that the transaction documents have been submitted to the Land Registry.

There is also a suggestion to obligate the buyer to complete the transfer within a reasonable time period, provided that there are separate deeds, otherwise fines will be enforced. And that unsold housing stock should be exempt from taxation.

The Inland Revenue Department has proposed that property tax is calculated based on estimated prices in 1980, expressing serious doubts whether the state will be able to collect the amount of €130m if the tax is based on 2013 prices.

During a meeting between Inland Revenue and the Land Registry last week, officials said that it is unlikely that the estimations of property tax based on current prices can be completed in time and doubt that Cypriots will accept the new amount or be able to pay it. A Plan B has been proposed, whereby the same values as last year are implemented in order to reach €130m in accordance with the bailout terms. The proposal was presented to the international lenders during their last visit and officials report that there were no objections. Officials from the Land Registry are expecting the revised values to be available by the end of June as per the memorandum and point out that there will be no delays.

Inland Revenue also proposed that the Land Registry should include buildings that were developed in areas which were registered as fields or plots in 1980 when the prices were estimated, in order to make taxation fairer.

However, the Land Registry is said to have rejected the proposal claiming that it is not feasible.

call for tax changes

Readers' comments

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  • Steve says:

    Mr Aristodemou is bleating because the IPT has increased dramatically in the last two years and the payments are painful for his company. However, he has already tried to get the aspirant title deed holders to pay up now for the whole period since handover. I deduce from his latest comments that not many are paying. The solution, as someone comments on this web site virtually every day is to speed up the transfer of title.

    However, it is noteworthy that Mr A refers to “the intentional delay of property transfers” by the government. This is a crack in the previously impenetrable combined defences of the state and the building industy with regard to issuing of title deeds.

    To be fair to Mr A, I have to say that I have never heard of a single case of delay of transfer because Aristo had a mortgage on property they had sold. In fact, in years gone by, Aristo plastered the island with billboards saying title deeds from Aristo were guaranteed. You don’t see those adverts any more; I wonder why.

  • Peter Davis says:

    In 2012 when I went to my developer’s office to collect my deeds he had 110 completed files which were ready. But the owners now either didn’t want the deeds, or could no longer afford to pay his fines and the exaggerated costs from the Land Registry.

    When you buy a home you should know to the penny how much it would cost “from the beginning”. For us it took all our savings and the deeds were completed 10 years later.

    These people had a golden egg, but rather than nurturing it they decided to make an omelet.

  • andyp says:

    @Adrian.

    Believe it or not it is already a criminal offence punishable by fines and/or a jail sentence. Just another law ignored in Cyprus.

  • Adrian says:

    It is so simple. If you hold the title deeds you pay the tax, no refund or passing on the charges. That way the developer would make sure that there was a completion certificate and the title deeds were issued within weeks. If the developer was at fault and had not completed the work but allowed the owner to move in the developer should be fined daily until work completed.

    The transfer fee should be included in with the house and paid to the Land Registry by the lawyer when they collect the title deeds.

    Unfortunately this plan cannot allow for the inherent corruption and nepotism throughout the system !!!

  • Stuart says:

    What sort of tax regime allows the Cypriot tax payer to choose whether to accept it or not or, alternatively, sets the level so high that nobody has the means to pay the amount due anyway? Either way, the situation is farcical and further illustrates the chaotic style of governance that exists throughout.

  • Suzannah says:

    I quite agree with Aristodemou that it is ludicrous that if Title Deeds are ready and the buyer refuses to have them that the Developer should still be liable to pay however it is also ludicrous that the buyer should have to pay IPT when the Title Deeds are not available, even after many, many years because in most cases the Developer has committed infringements and that they should have to pay an inflated amount due to the amount of property still registered to the Developer when in reality many would have a nil liability on the value of their property.

    The amount of work created for the Tax and Land Registry is ridiculous.

    They have already received almost a €1k of my money because I have sold my property so had to pay 9 years IPT to the Developer just so that I could sell and will never be in a position to claim any of that back – Daylight robbery is what I call it!!

  • andyp says:

    Maybe if they cleared their mortgages and gave us title to the homes we thought we bought we could pay some of the tax.

    My heart bleeds for these purveyors of doom.

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