Wealthy Chinese face a myriad of new tax rules as Beijing ratchets up the pressure on tax evaders and on sheltering of assets. This puts pressure on Chinese buying property in Cyprus as well.
Bloomberg recently reported that Chinese investors are choosing specific methods and ways to avoid tax evasion, and that in the last few days the country’s state media has been constantly referring to new rules aiming to combat this trend. Specifically, with the implementation of the Common Reporting Standard which focuses on the exchange of information between China and Authorities of third countries for tax identification purposes, it appeared that a significant number of Chinese are tax evaders. As a result, the Chinese government has launched a “hunt” to collect attributable amounts by tax evaders.
The CRS is a system for exchanging information between tax authorities, for example if a Chinese citizen opens a bank account in Cyprus then the Cypriot authorities are obliged to inform the Chinese Authorities and vice versa. Cyprus and China began exchanging information through the CRS since last year.
Bloomberg also reported that a referenced person in the CRS is any legal entity or a natural person who resides in a state that applies the CRS. However, certain assets such as real estate are excluded from this standard. On the other hand, INSIDER was informed that at the behest of the Organization for Economic Co-operation and Development, it is up to banks to ask for additional information from third-country nationals and to then forward this to relevant tax authorities.
Bloomberg also referred to Cyprus saying that Chinese nationals have taken advantage of the citizenship by investment programme the Mediterranean island has on offer, and have possibly undermined the CRS.
According to a recent study by the Ministry of Finance on the citizenship by investment programme, it is mainly Russians and Chinese who obtained Cypriot citizens by investing primarily in real estate.
Based on the same study, Limassol is the top choice for f Russians who buy apartments in high-rises, while the Chinese choose Paphos to invest in houses.