Cyprus property tax receipts tumble 17%

A slump in Cyprus property prices led to a dramatic decline in revenue for the government, with receipts from capital gains taxes on mostly property deals tumbling 17% YoY in the first four months of 2008, while income from property taxes fell 25% YoY.

Capital gains taxes in the period from January till April 2008 fell 17% to EUR 116.18 mln from EUR 139.42 mln in the same period a year ago, while property revenue fell 25% to EUR 1.5 mln from EUR 2 mln a year ago.

The decline in revenue from property dealings forced the total tax revenue of Cyprus in the first four months of the year to EUR 554.19 mln, up only 2% YoY compared to EUR 532.11 mln collected in the same period in 2007.

Record property taxes played a key part in boosting overall tax revenue higher, allowing Cyprus to record a 3.3% surplus in 2007. For 2008, the Finance Ministry has forecast a surplus of 0.5% of GDP.

Income tax receipts from employees in the first four months fell 3% to EUR 130.61 mln, but income taxes from the self employed increased by 20% YoY to EUR 11.05 mln while corporation tax surged 11% YoY to EUR 88.13 mln. Another bright spot was income from the Special Defence Fund, which increased by 25% to EUR 161.3 mln.