“Today we made another important step towards tax reform and reducing the tax burden for households and corporations,” the Minister of Finance Harris Georgiades said following a Council of Ministers meeting.
He said the government approved a reduction of the Immovable Property Tax (IPT) by 50% to 0.5 ‰ (per mille) offsetting the obligation by the EU to charge VAT rate of 19% on transactions of property in the context of commercial transactions of buildable land.
Georgiades said the estimated revenue from the 19 VAT is €24 million whereas the revenue loss from the reduction of Immovable Property Tax is estimated to be €45 million.
This reduces tax revenue from immovable tax from €103 million to €45 million, he said adding the tax break amounts to at least €58 million.
Furthermore, Georgiades said the Council of Ministers decided to maintain the 20% discount on citizens who timely repay their immovable tax via the internet or through credit institutions and the 17.5% discount for citizens who pay their Immovable Property Tax on time at the Tax Department counters.
Immovable tax up to €25 will not be collected, the Finance Minister said.
Georgiades also said the government reduced the transfer fees by 50% for all immovable property sales.
“With this proposal, that will be submitted to the parliament the soonest possible, I believe we are taking another step towards reducing those burdens that have been rendered necessary in the previous years,” Georgiades said.
The proposal’s total fiscal impact is estimated at 0.2% GDP, he added.
Georgiades explained the 19 VAT is imposed on plot sales by land developing companies and not on transactions by natural persons.
Source: Cyprus News Agency