The Inland Revenue Department of Cyprus said that it has detected around ten individuals who transferred money abroad a few days prior to a Eurogroup decision to impose a haircut on deposits, but have not complied with their tax obligation for the year 2011.
Cyprus requested and received a €10 billion financial assistance package from the Troika, which featured a sizeable reduction of the island`s banking sector, as well as bail-in of uninsured deposits. Under the aid package agreed in March, Cyprus closed one bank, the Popular, whereas deposits over 100,000 euros held at the island’s biggest lender, Bank of Cyprus, lost 47.5% of their value, after being converted into bank shares.
Director of the Inland Revenue Department George Poufos told the press on Thursday that the Department is scrutinizing the lists of 6000 transactions of natural and legal persons, locals and foreigners, who transferred money abroad before the Eurogroup session, mainly from the Bank of Cyprus and the Popular Bank.
Poufos made clear that the transactions were not illegal but said the department has found that around ten natural persons have not complied with their tax obligation for the year 2011.
He also noted that the number could increase.
The Director of the Inland Revenue Department also said that “revenue drivers have decreased and in turn the Department’s ability to collect revenues deriving from profitability”.
“Things are very difficult,” Poufos said. According to IRD Director, the Department’s revenues increased until last July by 1% or 13.6 million compared with the same period in 2012, but “have been decreasing slowly”.
However, Poufos appeared satisfied, as the Department’s revenues from immovable property tax have exceeded expectations.
He said that so far the Department has collected 85 mn, some of which will be returned to taxpayers either because they should have not paid the tax or because they paid more than they should.
Poufos explained that the Memorandum of Understanding Cyprus signed with its international lenders predicts revenues of 139 mn from immovable property taxes, but recovery is expected to reach 70%.
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