THE TAX CUTS on immovable property that are being proposed by the government were examined by the Finance Committee and Internal Affairs committee on Thursday, amidst intense reactions from various municipalities and political parties, according to in-Cyprus.
Under the new tax framework, there would be a flat-rate Immovable Property Tax of 0.5 per thousand (0.05%) on all properties, which will be levied on the basis of 2013 values.
However, around 19% of owners will be exempt, thanks to a clause that says tax bills of up to €25 per property owner are exempt.
The government proposal would also abolish certain taxes levied by the municipalities and communities.
According to the law under discussion, taxpayers will benefit from a 20% discount whenever they pay their taxes on time through the internet or credit institutions. They will also receive a 17.5% discount for a timely payment at the Tax Department.
A 50% cut in Property Transfer Fees on the sale of immovable property is also planned.
The legislation also includes the introduction of a 19% VAT rate on sales of plots of land for commercial activity.
Most political parties expressed opposition to this move. They have also requested that the flat rate proposed by the government be changed to a graduated tax.
The municipalities disagree with the abolition of municipal property taxes, and say that the government’s proposal impinges on the economic and administrative autonomy of local authorities. They say that the municipal Immovable Property Tax is the basic source of revenue that has largely provided for the development of the local infrastructure.
The government wants the set of laws on Immovable Property Tax to be presented to the House of Representatives for voting before July 15, when the House closes for the summer. This is because the Tax Department must send its taxes out by August at the latest.
Discussions on the property tax reforms proposed by the government are scheduled to continue on Monday.
Last year the government took in €103 million in revenue from the Immovable Property Tax and the taxes from the local authorities. Under the new tax law, it would take in €45 million.