Ruling Disy party are trying to shield banks’ capital basis in Cyprus through a proposed bill which was debated yesterday (Monday) before the House Finance Committee. Addressing the Committee, Tax Commissioner Yiannis Tsangaris said the proposed amendments also apply to the Bank of Cyprus which has been merged with Laiki Bank.
The draft bill provides that a deferred tax demand, that has been created or is being created at a credit institution due to tax losses that have been transferred or will be transferred from another credit institution that has been restructured or liquidized under the provisions of the relevant legislation, can be credited against certain taxes.
Committee members heard that the legislation concerns accounting changes regarding the way taxes are paid by merged banks, so as to allow them to pay this tax over a period of up to 15 years. Essentially, the draft bill gives banks the right to present higher capital gains. A representative of the Ministry of Finance said the proposal will not have an impact on public finances. The Central Bank of Cyprus, the Ministry of Finance and the Association of Accountants support the proposed bill.
Meanwhile, seven proposed bills drafted by Disy and centre Diko providing for the granting of tax exemptions in cases where immovable property is transferred by the borrower to the lender as part of a loan restructuring are going before the plenum for approval. These draft bills basically extend tax exemptions so as to also apply in transfer cases by natural as well as legal persons associated with the borrower.
Since last July, tax concessions have also been granted in the case of the sale of immovable property to third parties and companies in the open market, so that proceeds of that sale can go towards the reduction or repayment of loans.