CYPRUS: Tax reforms to boost ‘non-doms’, growth returns

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President Nicos Anastasiades announced tax reforms on Wednesday aimed at attracting non-domiciled wealthy foreign investors and introducing a more competitive and fair taxation network.


Addressing the 54th annual meeting of the Institute of Certified Public Accountants of Cyprus (ICPAC), he said the aim was for this administration to become the first government in the island’s history that will have succeeded not only in reducing public debt, but also in reducing past tax brackets.
He announced that earlier in the day, his Cabinet took a series of decisions that modernise the taxation framework making it more fair and more competitive, while limiting the taxation burden and offering incentives for growth.
The measures include the extension until the end of 2016 of the increased capital allowance for machinery, installations and buildings, the introduction of the ‘non – domicile’ term, the reduction of transfer tax for all real estate sales by 50% until 31/12/2016, the abolition of municipal and community taxes on all properties and the introduction of a single property tax on the basis of a single low tax rate.
The President also said that Cyprus will remain an attractive destination for foreign investors with many advantages, like its high level of professional services.
Referring to the economic situation in Cyprus, he stressed that the country has made important steps forward compared to two years ago and that “we have restored the credibility of our country and our banking system and our economy is now recovering”.
However, the President said that there are still a series of problems that the country has to overcome, like unemployment and pledged to do his utmost to address them.
At a separate event oraganised by the Cyprus Investment Promotion Agency, Anastasiades said that Cyprus is “once again registering positive growth rates.”
“If world economic history has taught us one thing, it is that a government’s role is not to substitute entrepreneurship but instead to open the road by removing obstacles and distortions such as those posed by bureaucracy and high taxes”, he said, and referred to the measures taken by the government that aim to modernise the taxation framework.
He said that for the past two years Cyprus is implementing a program of economic reform and fiscal consolidation. “I fully acknowledge that more needs to be done. But I can state that our economy has indeed stabilised and has already turned the page”, he said.
“Public finances are under control. Capital controls have been lifted. Market access has been re-established. Rating agencies have offered us successive upgrades. All these testify to our determination to close the chapter of uncertainty and recession once and for all”, he added.
The President noted that all of the aforementioned positive signs of recovery are also widely reflected in the number and size of foreign investments that the country has seen during the past 12 months.
In the past year, he said, we have seen some of the most sizable Foreign Direct Investments (FDIs) in the banking sector, tourism, real estate, energy, telecommunications and professional services.
“Only last month, the VTT Vasilikos (VTTV) terminal for the storage and management of petroleum products, a €300 mln project, was inaugurated and started operating,” he noted.
Furthermore, “we are witnessing significant initial demand for new ventures such as the port facilities, the integrated casino resort, the new marina of Ayia Napa and others”.
As regards energy, he said that it is a strategically important multi-billion sector with promising potential, not only through the discovery of offshore natural gas, but also through renewable energy sources, adding that only last month, Block 12 of the Exclusive Economic Zone was declared commercial by Noble Energy, Delek Drilling and Avner Oil Exploration.
“Promising opportunities for growth also exist across many other sectors, such as shipping, tourism, large-scale mixed-use development projects, education, health, research and innovation”, he added.