Cyprus tax receipts jump 43.3% in Jan-Nov period

The Cyprus Inland Revenue reported yet another bumper tax receipts on the back of intense activity in the property market and also on the back of higher corporate tax receipts as the economic expansion feeds more money into government coffers.

Total tax revenue in the first eleven months of 2007 jumped 43.3% YoY to CYP 1.06 bln or EUR 1.82 bln compared to CYP 742 mln or EUR 1.27 bln revenue in 11M06, representing a record CYP 321 mln or EUR 549 mln increase, according to the Cyprus Inland Revenue Department.

Capital gains tax surged 142% YoY to CYP 247.1 mln or EUR 422 mln, with most of it originating from intense activity in the real estate market in the run up to the imposition of VAT on land purchases and a rush by foreigners to snap up luxury property in Cyprus.

The 4.4% GDP growth rate coupled with a rush by foreign companies, especially from Greece to set up companies here to take advantage of Cyprus’ competitive tax rate helped boost corporate tax revenue by 39% YoY to CYP 335.98 mln or EUR 574.1 mln.

Income tax from employees was up 12% YoY to CYP 213.39 mln or EUR 364.6 mln in the period from January till November 2007, according to the IRD. Revenue from self-employed was up 27% at CYP 29.2 mln or EUR 50 mln, while revenue from the immovable property tax firmed by 16% YoY to CYP 6.9 mln or EUR 11.9 mln.

Revenue from special contribution of defence fund improved 28% YoY to CYP 162.87 mln or EUR 278.3 mln, helped in part by a huge jump in bank deposits, with the government charging 10% on all interest earned.

The Inland Revenue also reported that stamp duty improved 49% to CYP 37.8 mln or EUR 65 mln, penalties were up 8% YoY to CYP 24.5 mln or EUR 41.8 mln while other taxes increased 62% YoY to CYP 5.11 mln or EUR 8.7 mln.

The sharp increase in tax revenue, most of it unexpected and not sustainable according to the Finance Ministry has allowed the government to forecast a fiscal surplus for 2007 of up to 1.5% of GDP, the first such surplus that one could remember.