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

Corruption in the Land Registry

corruption FURTHER details are coming to light of the 2014 report by the Cyprus Auditor General, Odysseas Michaelides, which was handed to President Nicos Anastasiades on Monday. The report has created a storm through the bleak picture it has painted of corruption in the Land Registry and poor collection of taxes.

The research into occupational groups revealed tax evasion among the medical and legal professions, with many not even being registered for tax purposes.

One example was a doctor in Nicosia who reported total income of €358,533 for the period 2006-2009. Yet during the same period the taxpayer spent €652,059 (or €757,059 based on Land Registry records) for the purchase and renovation of real estate.

Another example was a lawyer in Larnaca who filed no tax returns for the years 2007 to 2010. The taxation services did not take prompt legal action against him, yet according to other records the taxpayer purchased property worth €800,000.

Under-taxation

The tax department was also found to have under-charged in a number of cases. For example, government revenue was lost owing to the way in which a company that owned of 12 plots in Ayia Napa was taxed.

The value of the 11 properties assessed in 2002 on the basis of values in 1980 amounted to €4,102,345 (€4.1m). However, for the years 2002-2012, the Department imposed taxes on real property at a value of only €546,325, resulting in estimated loss of about €168,000 to the government.

Another company registered its name as the owner of a field in Paralimni that turned out to be a building. The value was estimated in 2011 and at 1980 prices at €1,623,171. The Tax Department imposed property tax only for the years 2012-14, and appears not to have imposed taxes for the years 2002-11. This resulted in a €51,000 tax loss for the government.

A registered owner of three properties in Kaimakli valued at €407,875 was not taxed at all in 2013-14, while for the years 2008-12 it was taxed at a discounted value of €371,738.

There were also cases in which there was a big increase in valuation for tax purposes from 201 – the year in which new tax rates came into force and new valuations were made.

A company that owned a hotel complex and tourist apartments in Protaras was taxed in 2013 on the basis of a valuation of €3,622,235, whereas the previous year the company was taxed on the basis of a valuation of €387,243.

Another company was taxed in 2013 on property valued at €1,710,000 at whereas in 2012 it had been valued at €189,655.

The Auditor General a found that 30 legal entities engaged in land development owed €14.7m in interest and charges as of February 2015. Of this total, €11.1m (75.6%) concerned due taxes for the years 2013 and 2014.

Total overdue taxes reached increased by €11.38 million to €733.37m in 2014, from €721.99m in the previous year. Overdue interest on tax payable amounted to €421.30m, bringing the total arrears to €1,154.67m (€1.2 billion).

Around 40%, or €461.78m of the arrears are considered “uncollectable”.