FIVE experts presented their views at a special Cyprus International Institute of Management (CIIM) event on Monday, April 12, on the hot and widely discussed issue of raising the taxation on property to increase much-needed government revenues in these turbulent economic times.
The event was organized in co-operation with RICS Cyprus, with POLITIS newspaper as media sponsor.
Speaking to a packed audience of realtors, accountants, lawyers and CIIM students and friends, the five experts approached the subject from different angles, presenting their views on property taxation in relation to their field of expertise. They were:
Dr Michael Sarris, former Minister of Finance and World Bank executive;
Jerry Schurder, FRICS, Head of Rating Gerald Eve LLP;
Panikos Tsiailis, Chartered Accountant, Partner at PricewaterhouseCoopers Cyprus;
Andreas Demetriou Barrister, FCI. Arb. Chartered Arbitrator, Partner at Ioannides Demetriou Law Offices LLC;
Dr Theodore Panayotou Director of the Cyprus International Institute of Management.
Dr Sarris outlined the general principles of real estate taxation and referred to the situation in Cyprus today, highlighting ways and measures that could achieve an increase in government revenues while modernizing real estate taxation.
Dr Sarris suggested that the property taxation system should be linked to a wider reformation of the public sector, by transferring real estate taxes to municipalities to strengthen their sources of stable income, linked to services they provide.
Jerry Schurder presented the property tax system applied in the UK and described the local council tax on property, as an effective and relatively just system of property taxation, although it needs more frequent revaluations, which can be cost-effective through the use of Computer Assisted Mass Appraisals (CAMA) and Automated Valuation Models (AVM).
Mr Schurder also referred to property taxes paid by businesses in the UK and suggested the design of a new system incorporating regular revaluations, transparency, simplicity, reliefs and exemptions.
Panikos Tsiailis analyzed the way tax on immovable property is calculated today for corporations and individuals, based on three different sets of laws: the income tax law, the special defence contribution and the capital gains tax law, which create many complications and difficulties.
Mr Tsiailis proposed a number of measures to simplify things, like the abolition of the capital gains tax, the introduction of a ceiling in the taxation of individuals and the design of a new tax return form to include all taxes.
Dr Theodore Panayotou spoke on the possibility of property taxation serving more purposes than simply filling the coffers of the government with revenues. Dr Panayotou suggested the creation of a property tax system which will apply higher rates to individual or corporate developments which are negative for society and the environment, and lower rates for those developments which have a positive impact.
Dr Panayotou propagated a differential taxation system which will not discourage economic activity, will minimize negative externalities and maximize positive ones, encourage infill development and discourage urban sprawl and energy wasteful patterns of development.
Andreas Demetriou presented the legal issues in property development in Cyprus and outlined the basic characteristics of the Cyprus land law and land registry system, both stemming from colonial legislation; the land registry system being particularly unique in that it traces all land titles back to the date of the “General Survey” conducted by the British when they acquired Cyprus in 1878.
To read the speakers’ presentations in full, please click on the links below.
Reportage by Politis (in Greek)
For a full report on proceedings, visit ‘Property taxation – a double-edged sword, handle with care’ on the RICS Cyprus website.