Main opposition party AKEL has tabled two bills targeting excess profits with a whopping 90% windfall tax on energy producers working with Renewable Energy Sources.
The bills tabled by the left-wing party foresee that producers will be taxed retrospectively for any excess profits they made in 2021 and 2022.
The proposals also tax the excess profits of companies selling petrol products, claiming that firms made extra profits taking advantage of the fluctuation of petrol prices internationally.
Petrol station owners have rejected the allegations.
It is currently unknown how the government will react to AKEL’s proposals. It has launched its own procedures, examining whether energy producers have made huge excess profits.
Government officials have said that authorities are contemplating introducing an extraordinary tax on excess profits from energy production early next year.
Earlier in the summer, the Finance Ministry established a working group to identify whether producers have made huge profits.
The government said that it was ready to address the issue.
RES electricity producers will be taxed under an amendment to the law on the operation of the RES and Energy Savings Fund based on bilateral contracts.
According to AKEL, taxation will impose a “return fee” on producers.
According to the proposal, windfall profits are the positive difference in the gross profit margin of the month under review compared to the same month of the previous year.
Gross profit margin is the profitability ratio, expressed as a percentage of the gross profit on sales, during an accounting period.