Cyprus tax revenue up 0.8% in 2008

Total tax revenue collected by the Inland Revenue Department (IRD) in 2008 increased
marginally by 0.8% Year-on-Year to EUR 2.15 bln compared to EUR 2.13 bln in 2007.
Corporation tax revenue saw the most significant increase, climbing 9.9% to EUR 821.7 mln as Cyprus based companies reported record profits and also on the back of higher tax revenue from international companies registered in Cyprus. Tax revenue from Special Contribution for Defence climbed 22.6% to EUR 385.3 mln. This is a tax that banks deduct at source by imposing a 10% tax on the interest income earned on money placed with Cyprus banks on deposit.
On the other hand, revenue from Capital Gains Tax declined by 35.3% to EUR 302.4mln, owing to the decline in demand in the property market. A decline was also observed in Immovable Property Tax, down 6.1% and in Other Taxes down 20.5%.
With the property sector expected to further contract during 2009 and corporation tax on Cyprus companies seen generating lower profits, government revenue in 2009 will likely to be flat or even lower compared to 2008.