Cyprus aims for a Green Tax Reform

Cyprus aims for a Green Tax Reform

During the Economic Forum, that was organised by the main opposition party Akel, on the 14th and 15th February 2020, the Permanent Secretary of the Ministry of Finance, Mr. Giorgos Pantelis, heralded the new green tax reform, in which its implementation is underway (http://www.nomisma.com.cy/index.php?id=96459).

It should be noted that it has been 18 years since the last revision of the tax regime in Cyprus, in 2002, reflecting the need to modernise it.

Mr. Pantelis proclaimed that the new tax reform, which is currently at an early planning stage, will have an environmentally oriented direction, and explained that it will encompass measures for a fiscally neutral green tax reform.

The above-mentioned echoes what the former Minister of Finance, Mr. Harris Georgiades declared last year, that modern trends of the economy are in the direction of environmentally friendly tax reforms, the so-called “Green Tax Reform”. This increases taxation of energy-consuming products and on the other hand introduces tax reliefs primarily on labour, for example on social contributions paid by employees and employers (https://in-cyprus.com/government-to-introduce-a-green-tax-reform-by-2021-says-finance-minister/).

Additionally, the tax plan in question would also take into account similar compensatory measures, which would ensure fiscal stability by offsetting the fiscal surplus resulting from green taxation in labour reform (https://www.stockwatch.com.cy/el/article/voyli-oikonomia/g-panteli-sta-skaria-i-forologiki-metarrythmisi).

Mr. Pantelis also referred to a bill that was approved in 2019, in order to re-evaluate road tax on cars based on their exhaust waste and the vehicle’s age, having its aim to promote the sale of cars that are environmentally friendly (https://cyprus-mail.com/2019/03/16/parliament-passes-new-road-tax-measures/).

The Permanent Secretary also stated that the resulting revenue, stemming from the tax reform, will be returned to the citizen by reducing the tax burden on employment.

He continued and said that the tax department has achieved its strategic goals of voluntary tax compliance, effective tax collection, improving the efficiency and effectiveness of taxpayer services.

He also stated that serious efforts are being made to strengthen tax control and prevent tax evasion. This is in light of the fact that political parties and professional bodies have recently agreed that the legal framework for tackling tax evasion must be strengthened (https://in-cyprus.com/concern-over-proposed-unannounced-tax-department-raids/).

He also explained that further modernisation of the department with new technologies, whose development, he said, is at an advanced stage, will have a major impact in this direction.

Mr. Pantelis added that one of the ambitions of the Ministry of Finance, revolves around the equitable distribution of tax burdens, supporting growth, employment and the green and sustainable economy.

A political decision regarding the new green tax reform, is expected within 2020