Two AKEL bills proposing a property tax on assets valued over €3 million and a tiered annual fee on companies will go to a parliamentary vote on Monday alongside government tax reform legislation, despite Finance Ministry opposition.
The bills will reach the plenary along with the government’s tax reform package. Nine other bills proposing VAT and tax reductions from AKEL, ELAM, the Greens and independent MP Alexandra Attalides will go before the Legislative Body in the new year.
The Finance Ministry expressed disagreement with the proposals at Thursday’s Finance Committee session. On the property tax, the ministry’s representative said it was indeed included in the Economic Research Centre’s reform study, but the government did not adopt it.
If the tax is reintroduced, consultation and a separate study are needed to avoid double taxation of properties, as Local Authorities currently impose such a tax, the ministry said. A Legal Service representative said the law should explain why the €3 million value and specific rate were chosen, noting the proportionality principle requires a tiered burden and ambiguities exist in the proposal.
Lawyers stressed the need for a comprehensive proposal, suggesting it would be better to abolish municipal property taxation and transfer it to the state.
The Cyprus Property Owners Association said the state wishes to impose a wealth tax on all assets but warned that rental prices will increase.
AKEL MP Aristos Damianou said the bill would impose tax on market estimated value and the taxation would concern the taxpayer’s total immovable property.
Greens MP Stavros Papadouris said he will submit an amendment so the taxation covers idle land and provides an exemption for primary residences.
Finance Committee chair and DIKO MP Christiana Erotokritou disagreed with taxing idle land. DISY MP Onoufrios Koulla noted that beyond the municipal property fee, citizens pay sewerage charges amounting to three-quarters of the property tax.
On the tiered company fee, the Finance Ministry said the ERC recommendation was not selected because no other European country applies such a fee. After the abolition of the fee several months ago, state credibility would be lost, the ministry said, noting that the increase in corporate tax to 15% does not help with imposing a company fee.
Lawyers also expressed disagreement. DISY MP Onoufrios Koulla said DISY had a more important bill regarding family tax-free income but did not open the issue to achieve consensus. He suggested AKEL’s bill on taxing bank windfall profits also be put to the plenary.
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