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Budget 2002 & Tax Reforms

05/10/2001 16:03
Finance Minister Takis Klerides yesterday presented the Budget for 2002 to the House of Representatives highlighting that the budget is geared towards aligning the Cyprus economy with Maastricht requirements and called for restraint for the current and next year in view of international economic conditions. Overall Mr. Klerides described prospects for next year as good, but everyone's contribution is necessary in order to achieve the standards required for our alignment with EU directives.

According to the Budget, expenditure will reach CYP 2.335 billion against revenues of CYP 1.736 billion, leaving a deficit of CYP 600 million. Development projects for 2002 include CYP 53 million for further implementation of the Road Network Development project, CYP 23 million for Water Development projects, CYP 26 million for education, CYP 24 million for government services housing. An amount of CYP 49 million has been made available for alignment purposes with the EU out of which CYP 40 will go towards expenditure for equipment, improvement of buildings and facilities necessary for alignment with european directives.

Mr. Klerides included in his presentation an outline of the proposed tax reforms stating that indirect taxation received by the state will be returned in the form of tax relief and social benefits. Tax reform measures include reduction of tax scales, reduction of domestic companies tax, reduction of tax from dividends, abolishment of defence fund contributions, reduction of various property taxes and others. There will be a gradual introduction of indirect consumer taxes and VAT to the minimum levels required by the EU.