Tax incentives provided by the State for the energy upgrade of businesses were discussed in the Parliamentary Committee on Finance.
Specifically, it concerns the draft law for granting increased capital allowances for capital expenditures for improving the energy efficiency of buildings, for machinery and equipment related to renewable energy systems and energy efficiency improvement technical systems, as well as for new commercial electric vehicles, taxis, and buses.
During the presentation of the draft law, a representative of the Ministry of Finance stated that it is divided into three pillars and will cover expenses incurred from 2024 to 2026.
It was mentioned that an increased capital allowance of 7% will be granted instead of the current 3% for improving the energy efficiency of buildings.
According to the ministry representative, a 20% capital allowance will be granted instead of the current 10% for capital expenditures for investments in machinery and equipment related to renewable energy systems and energy efficiency improvement technical systems.
Additionally, it was noted that an increased capital allowance of 25% will be granted instead of the current 20% for new commercial electric vehicles as well as taxis and buses.
It was also emphasized that with the draft law, expenses incurred for conducting energy upgrade studies for businesses or issuing energy-saving certificates will be deductible from taxable income, provided that the study or certificate issuance is carried out by an approved consultant registered as a specialized expert or licensed energy auditor by the Ministry of Energy.
Furthermore, in response to questions, it was stated that there is no issue of state aid.
It was also mentioned that the fiscal cost will be €600 thousand per year during the measure’s implementation. It was additionally indicated that this is an important draft law as it will contribute to the goal of energy upgrading.
The Cyprus Bar Association and SEK proposed that tax deductions be granted for electric vehicle charging stations. Regarding this, the ministry representative committed to revisit the matter.
Meanwhile, the committee also scrutinized the draft law which removes a specific article from the Income Tax Law, exempting from tax the income of companies established solely for the promotion of art, science, or sports.
On behalf of the Ministry of Finance, Naya Symeonidou noted that the specific article has been inactive since 2002, emphasizing that no conditions were ever set for its implementation.
She also pointed out that the provision could lead to abusive practices aimed at tax exemption. MPs expressed reservations about the draft law as it does not clarify who it applies to.
