Tax reform efforts have entered a new phase, with the main objective of adhering to the timetables, so that its approval becomes possible in the coming months and its implementation comes about on the target date set by the Government, namely 1 January 2026.
The completion of the public consultation on 10 September marked the transition to the next step of the entire effort, which consists, in the first phase, of the Finance Minsitry's evaluation of the suggestions and opinions submitted by the various bodies, so that those deemed reasonable and in line with the philosophy and objectives of the tax reform can be incorporated and become part of the bills.
To this end, and given the changes already announced by Finance Minister Makis Keravnos, contacts and meetings with involved bodies are continuing and are expected to continue in the coming days, while in a similar manner, the proposals coming from the parties are being collected and codified.
Besides, as Keravnos conveyed after Monday, 15 September's meeting with the political forces, the Government is ready to adopt positions, coming either from parties or from business entities, with which it agrees and which it believes can add value to the benefits it aspires to derive for the Cypriot economy, households and businesses from the country's tax reform.
Regarding the requirement that the entire effort be carried out within the timelines that will allow for the timely passage and implementation of the reform on 1 January 2026 , this was something that was highlighted and emphasised during last Monday's meeting with the Minister of Finance, Tax Commissioner Soteris Markides and the party leaderships.
On 16 September, Makis Keravnos appeared sufficiently optimistic on this matter, namely, about the implementation of the tax reform within the timetable.
Justifying his optimism, the Minister of Finance indicated that all issues are running in parallel. To further explain, he said that currently, the legislative work on the bills is also being carried out, consultations are taking place, all aspects of the issue are being monitored in the Cabinet, while several discussions have taken place and are taking place with the President of the Republic.
It is worth noting that an equally crucial necessity, as highlighted on 16 September by Cyprus Employers & Industrialists Federation (OEB) and with which Makis Keravnos also agreed, is that a comprehensive proposal be submitted to the Cabinet and subsequently to Parliament, and not the pillars on which it will be based in pieces.
And this, as aptly pointed out by the President of the OEB, George Pantelides, since any presetation of elements of the reform in bits and pieces, will create gray areas resulting in the failure to achieve the basic goal that has been set for fiscal stability.
The business sector's actions
However, with time pressing, the truth is that at least at the present stage, it appears that the Government, and specifically the Ministry of Finance, is winning another extremely important bet, that of the maximum possible acceptance of the proposed tax reform, both by business and by the country's political system.
Without, of course, prejudging anything in relation to the subsequent turn that things will take, since the final sum and the final indication that will be attributed will naturally depend on the final form that the bills will take.
It is for this reason that the country's business entities are not sitting idly by, but on the contrary, they continue and intend to intensify their contacts, including meetings with the parties, in order to ensure, to the extent that this can be ensured, that the convergences that are emerging today will not be overturned.
Michalis Antoniou: We are opening a circle of contacts with the parties
In this context, OEB is planning meetings with political parties to ensure that the decisions being promoted are developmental, supportive of business and generally contribute to improving the standard of living of citizens, as the Federation's Director General, Michael Antoniou, told InBusinessNews.
He also clarified that from the OEB's perspective, there is no provision in the reform package that constitutes a red line for it and that, on the contrary, it states that it is very satisfied with the contacts that were made at a technocratic level (Tax Commissioner) and at a political level (Minister of Finance).
Regarding the proposals submitted by OEB at a technocratic level on the tax reform bills, there was a very high degree of agreement with the Tax Commissioner. "I believe that many of them will be incorporated into the final bills," Antoniou commented.
Beyond that, as he explained, the reduction of labour costs, which concerns the employer's contributions to the Redundancy Fund and the Social Cohesion Fund, is still pending and is not included in the tax reform. He also added that there is the issue of introducing development incentives into the legislation, in order to support the country's innovative and export-oriented industrial production.
'No' to a tax reform in 'bits and pieces'
At the same time, Antoniou expressed OEB's concern about the risk of the tax reform moving ahead in bits and pieces, due to recent statements by various stakeholders.
"We are strongly against such a possibility. The reform package must be promoted as a whole for voting by the House of Representatives and the bills must be voted on simultaneously in a unified manner. No pending issues should be left for a later stage, as this would be the worst thing for the economy and legal certainty. This is something we also emphasised to the Minister of Finance, namely that we consider it extremely important that there be a unified promotion and implementation from 1 January, a milestone that we cannot miss under any circumstances," he stressed.
Philokypros Roussounides: The main issues that existed have been largely overcome
The next steps towards the implementation of the tax reform are awaited by the Cyprus Chamber of Commerce & Industry (CCCI), which in the near future may also begin a cycle of contacts with the parliamentary parties, which - moreover - will have the final say on the passage of the new legislation.
Speaking to InBusinessNews, the Secretary General of the Chamber, Philokypros Roussounides, indicated that after contacts with the Ministry of Finance, as well as official meetings with the Tax Commissioner - who, together with his team, also participated in a meeting of the CCCI Executive Committee - the Chamber declares itself satisfied.
"We discussed some of our concerns, some improvements that we considered necessary, and submitted suggestions regarding the simplification of procedures, the clearer interpretation of the bills, as well as issues concerning potential superpowers that would be given to each Tax Commissioner," Roussounides explained.
"Neither the Government, nor the Minister of Finance, nor the Tax Commissioner were dogmatic and inflexible towards our suggestions. On the contrary, there was a very good and constructive exchange of views," explained the Secretary General of the CCCI, adding that "several of the substantive suggestions of the CCCI will be adopted and there is relative satisfaction."
Roussounides left open the possibility that certain industries or pillar sectors of the economy could present their own demands - if they have not already done so - to the authorities, however, he stressed that "the main issues that existed have been largely overcome."
(Source: InBusinessNews)
