Cyprus income tax revenue declines 10.2% in 1Q09

The Cyprus Inland Revenue Department (IRD) reported that total revenue during the period January – March 2009 declined by 10.2% to EUR 400.2 mln compared to EUR 445.8 mln a year ago in the same period. 

The decline in revenue is mainly attributed to the 83.4% decline in revenue from Capital Gains Tax which tumbled to EUR 15.1 mln from EUR 90.9 mln a year ago, owing to the decline in demand in the property market. During the first three months of the year, property sale contracts announced by the Land Registry Departments were down by 64.7%. 

In a surprise development, corporate tax collections increased by 5.8% to EUR 82.9 mln in 1Q09, but the trend is not sustainable since most corporations are expected to report losses for 2009, or moderate profits. Meanwhile, the automatic pay increases given to salaried people helped boost tax collections from employees by 23.5% to EUR 118.5 mln, while tax collections from the self-employed was also up 13.9% to EUR 10.3 mln.