- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Property tax reform discussions continue

Cyprus property tax reformFINANCE Minister Harris Georgiades on Monday appealed to MPs to pass government legislation overhauling and streamlining the Cyprus immovable property tax (IPT) system before the parliament’s summer recess.

“If you do not pass it now, before parliament breaks for summer, the legislation will not apply in 2016,” Georgiades said.

He was speaking before a joint session of the House finance and interior committees, where the minister provided clarifications on a number of points raised by MPs.

Georgiades said owners of immovable property worth up to €50,000 would not be required to pay any tax.

Exempted from paying are the small owners with an IPT of up to €25. This exempts some 65,000, or 17.5 per cent of property owners.

But the minister warned that attempts to exempt even more people meant that those not exempt would end up paying a bigger share.

Discussion of the government bills continues next Monday.

The government has proposed introducing a flat immovable property tax rate to 0.05 per cent and scrapping the IPT paid to local authorities altogether.

The flat rate will be levied on property values updated in 2013. To date, IPT is calculated on 1980s values, excluding many properties because they did not exist at the time. Rates differ depending on the value.

The revenues from IPT will be used to fund local authorities which stand to lose considerable income by the decision to scrap their IPT.

Greens MP George Perdikis said his party opposes a flat rate, and suggested instead tweaking the current staggered rate, which he described as “fairer.”

A flat rate would benefit large landowners, he added.

At the same time however, the government plans to levy 19 per cent VAT on land sales as part of commercial property transactions. The finance minister has said it is a matter of compliance with EU directives.

This will fetch the state some €24m as opposed to around €58m in lost revenues from the reduction in the tax rate – down to €45m from €103m.