The House is backing legislation to abolish a €350 company annual levy paid to the Registrar of Companies, despite a Finance Ministry pushback claiming it would affect the government’s fiscal plans.
At a meeting on Tuesday, the House Commerce Committee decided to gradually abolish the annual levy to lighten the burden on businesses from inflation and the hiking cost of raw materials.
The committee did not reveal whether it plans to tweak or lower the levy for the years leading to 2026.
House Commerce Committee, DISY MP Kyriacos Hadjiyiannis told the media the committee proposed the gradual reduction of the fee to be abolished in the next two years.
One of the considerations being studied is to reduce the fee in 2024 by €100, dropping to €250.
Subsequently, in 2025 the fee should be reduced to €150 and abolished by 2026.
The parties tabled several proposals, including the immediate abolition of the fee and a reduction for smaller businesses.
However, MPs are concerned that any legislation they pass abolishing the fee could be considered unconstitutional, as parliament cannot reduce state revenues, interfering with the executive power.
Finance Minister Makis Keravnos has warned politicians against adopting legislation to abolish the €350 company levy.
Keravnos sent a letter urging parties to abandon any thoughts of altering the annual fee, arguing that any intervention would mean that state coffers would lose tens of millions of euros, affecting fiscal policy.
According to figures presented before the House Finance Committee, €45 mln is generated from the imposition of the fee, introduced in 2011, as part of fiscal consolidation measures.
Approximately 50% of registered companies do not pay the annual fee.
Not paying the fee is punishable with hefty fines.
Companies have until 1 July to pay the 2023 levy; otherwise, they will be charged a €35 penalty, with the fee rising to €385.
If businesses do not settle their debt by 1 September, the levy rises to €490.
The annual fee of €350 was imposed in 2011 across the board as part of measures introduced to support the Cypriot economy.
Parties then disagreed on the measure being applied universally, including SMEs.
The issue of abolishing or reducing the levy was initially raised before the Parliament in May 2018, when the Registrar of Companies called the measure unfair, while a representative of the Ministry of Finance dubbed the taxation as “anachronistic and irrational”.
At the House Commerce Committee in late 2019, a representative of the Ministry of Finance informed that the fee is on the list of taxes that may be reduced in the future.
The government and the Finance Ministry changed their stance on the issue in 2021.
In December that year, a Finance Ministry official told parliament the government did not support the abolition of the fee, as it would affect the state’s budget during the pandemic.
