New fiscal innovations of Cyprus

20.09.2012

  In connection with crisis of the Cyprus banking system caused by the tight bond with the Greece financial system, troika of creditors of  Cyprus  (the International Monetary Fund, the European Commission, the European Central Bank) insists on acceleration of the  Cyprus  budget drafting for 2013. 

  Recently a leak of information happened in the form of 20-page document with demands of the European fantasists. The contents of it is the following: requirement of tax increasing and cutting of the state expenses as a condition of granting a loan. 

  More precisely in the sphere of taxation it is proposed to increase taxes on tobacco, cigarettes, petrol and increase of VAT for 1%. In the sphere of  public sector financing the European creditors insist on 15% cut of salary of state employees and decreasing of personnel, on refusing of payment of the “13^th ” salary. 

On the basis:

http://www.imf.org/external/country/cyp/index.htm

Expert’s opinion

 Each day Cyprus has to strengthen its tax and financial policy in order to accumulate the state funds. As a bright example we should remind that VAT was increased from 15% to 17% and persons whose income exceeds 60,000 Euro are now taxable on 35% rate. 

 However, despite demands of the European creditors we shouldn’t forget of advantageous conditions of cooperation for Cyprus with the RF on short-term loan under rational percent (approximately 4,5% per year) without other financial “clauses”. This information You could find in one of our previous news (http://hbcomp.ru/about/news_and_mailings/news_jurisdictions/3396/). 

I suppose that existing of such possibility should stimulate Cyprus to refuse introducing of unpopular measures actively proposed by the troika of creditors. 

Julia Akhmetova ( Paralegal of Moscow office company Honest & Bright )