Tax on Cyprus semi-governmantal agencies to drop to 10%

The corporation tax on Cyprus semi-governmental agencies such as Electricity Authority of Cyprus (EAC), CYTA, the telecom giant and the Cyprus Ports Authority will decline to 10% from 25% previously as part of policy to allow the ‘quangos’ to compete at an equal footing with the private sector companies ahead of more liberalisation in the market.
The change will take effect as of January 1, 2009. Finance Minister Charilaos Stavrakis said the reduction was a pledge included in President Christofias’ electoral manifesto; the government has already submitted the relevant draft bill to Parliament.
As a result of slashing the corporation tax, the state stands to lose some EUR25 mln annually, said Stavrakis.
The move is part of the administration’s proposed restructuring of the organisations, which it wants to make more financially sound, competitive and independent but at the same time maintaining effective control over them since President Christofias has made it clear that he will not proceed with part-privatisations or even the floating of a small number of shares on the stock exchange.
“They should exert efforts to get rid of non-essential operating costs, cut back on manpower or at least freeze new hiring,” said Stavrakis. “This will be done in order to increase productivity,” he added.