27/10/2004 12:00
Despite the low effectiveness of the tax amnesty as a measure of fiscal consolidation, the Cypriot citizens have showed the first signs of interest, after the launch of the official campaign. Although the state revenues from the tax amnesty have been calculated between £3 and £4 million, the interest on behalf of Cypriots will culminate few days before December 4, when the tax ratio for the amnestied capital will increase from 5% to 6.5%, Chairman of the Special Tax Return Committee, Theofilos Theofilou told StockWatch.
“Cypriots are people of the last minute. However, their hesitance is possibly attributable to the fact that the measure concerns the amnesty of the capital from the non payment of the income tax and not from the non payment of the VAT”, he noted.
Neophytou: Tax evaders still run the risk
Similarly, member of the Tax Committee of the Institute of Certified Public Accountants of Cyprus, Neophytos Neophytou said that the VAT Service is more effective, which means that tax evaders run the risk of being caught.
“We do not urge our customers to adopt the measures. We are just explaining to them the provisions of the law. By adopting this temporary measure, they will be able to proceed to the amnesty of capital abroad, which reduces the risk for the competent authorities of the island to be informed on the issue”, he continued.
Revenues
The state will proceed to stricter controls after the expiry of the effectiveness of the tax amnesty and will be able to exchange information with other European countries, a Finance Ministry representative said.
“The procedure requires full confidentiality. All documents collected by the Committee will be destroyed before the Personal Data Protection Commissioner”, he continued.
It is noted that the success of the measure is largely based on the enforcement of the Convergence Program. Despite the efforts for a drop in fiscal deficit by £140 million in 2004, the tax amnesty is expected to add £50 million to the state funds by late 2004. The increase in the state revenues for the first half of 2004, however, raises hopes that fiscal deficit will drop to 5.2% of GDP even if the tax amnesty is not as effective as expected.
FINMIN is satisfied
So far, Finance Minister, Makis Keravnos appears fairly satisfied with the enforcement and the effectiveness of the measures. “I hope that this will continue in 2005, which is a critical year for Cyprus”, the Minister concluded.
“Cypriots are people of the last minute. However, their hesitance is possibly attributable to the fact that the measure concerns the amnesty of the capital from the non payment of the income tax and not from the non payment of the VAT”, he noted.
Neophytou: Tax evaders still run the risk
Similarly, member of the Tax Committee of the Institute of Certified Public Accountants of Cyprus, Neophytos Neophytou said that the VAT Service is more effective, which means that tax evaders run the risk of being caught.
“We do not urge our customers to adopt the measures. We are just explaining to them the provisions of the law. By adopting this temporary measure, they will be able to proceed to the amnesty of capital abroad, which reduces the risk for the competent authorities of the island to be informed on the issue”, he continued.
Revenues
The state will proceed to stricter controls after the expiry of the effectiveness of the tax amnesty and will be able to exchange information with other European countries, a Finance Ministry representative said.
“The procedure requires full confidentiality. All documents collected by the Committee will be destroyed before the Personal Data Protection Commissioner”, he continued.
It is noted that the success of the measure is largely based on the enforcement of the Convergence Program. Despite the efforts for a drop in fiscal deficit by £140 million in 2004, the tax amnesty is expected to add £50 million to the state funds by late 2004. The increase in the state revenues for the first half of 2004, however, raises hopes that fiscal deficit will drop to 5.2% of GDP even if the tax amnesty is not as effective as expected.
FINMIN is satisfied
So far, Finance Minister, Makis Keravnos appears fairly satisfied with the enforcement and the effectiveness of the measures. “I hope that this will continue in 2005, which is a critical year for Cyprus”, the Minister concluded.
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