Repossession legislation delayed

Nigel Howarth
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5

OPPOSITION MPs have delayed the implementation of the repossession legislation until the end of January. The proposal, which was submitted by the Movement for Social Democracy (EDEK), passed by 39 votes to 19.

Communist party AKEL had earlier proposed that the legislation should be suspended until the end of June, but this was rejected by MPs.

Reacting to the decision Finance Minister Harris Georgiades had some harsh words to say in a statement. “Today’s decision by parliament critically undermines our country’s credibility,” adding that “Suspending enforcement of legislation, which is not enforced anyway, is an unnecessary and unjustified act. It simply sends the message that we have not, unfortunately, rid ourselves of the mentality and behaviour that cost us so dearly.”

The suspension comes just a few days after the disbursement of the €350 million tranche of the bailout loan; the foreclosures law was a requirement for its release.

The disbursement of an additional €86 million from the IMF has yet to be confirmed. A meeting of the IMF board to decide whether to release the money is scheduled for tomorrow. But according to a government source, the subject may not be discussed.

The international lenders had informed Cypriot authorities before today’s decision that the suspension of the legislation could jeopardize the planned return of the Troika for the sixth assessment.

The Troika planned to visit Cyprus again on 27th January.

Three hundred thousand lost sheep

Nigel Howarth
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10

Three hundred thousand lost sheepFOLLOWING the article we published last year (Land Registry myth exploded) the Auditor General’s report for 2013 reveals that the government is unable to collect taxes from some 305,000 people because Land Registry records do not contain their ID card numbers.

Of those 305,000 approximately 207,000 are owned by Greek Cypriots according to Land Registry figures at July 2014.

The 1980 taxable value of these properties amounts to €1.7 billion representing 10.1% of the total taxable values of all properties, which amounts to €16.5 billion.

Furthermore, as Land Registry taxable values are used to assess local property taxes, municipal taxes, sewerage system charges, etc., both the government and local authorities are being denied significant amounts of money.

In his report Auditor General General Odysseas Michaelides recommends that the relevant government and local authority departments work together and develop a plan to resolve the problem with the help of the property owners themselves.

Title Deeds backlog

Michaelides was pessimistic that the Land Registry could achieve the target agreed between the Troika and the government to reduce the Title Deed backlog to less than 2,000 cases pending for more than a year by 31st December.

He reported that during the first six months of 2014 a mere 7,014 Title Deeds were issued and, by 11th July, a further 23,300 remained in the queue waiting to be issued.

Aristo Developers lays off workers

George Psyllides
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11
Aristo Developers lays off workers

Aristo Developers lays off fifty workersARISTO DEVELOPERS on Monday blamed the dismissal of 50 workers mainly on the company’s legal troubles relating to a suspicious land zoning case that saw its owner charged, along with his wife and two others.

The company said it had tried to preserve jobs in the hope that its sales would recover. But it was impossible to do in the near future because the “unprecedented and unjust accusations and actions” have partially achieved their objective, dealing a serious blow to the status and reliability of the company.

Aristo Developers boss Theodoros Aristodemou, his wife and head of design Roulla, draftsman Christos Solomonides, and former municipal employee Savvas Savva had been charged in connection with suspected land-demarcation fraud case in Skali, Paphos.

It emerged that the plans for which the demarcation permits were issued were switched with new plans, which seemed to cede approximately 3,000 square metres, worth hundreds of thousands of euros, previously designated as green space, back to Aristo Developers.

The company spoke of minds who did not hesitate to smear, in the worse way, the “dignity of our society’s benefactors and pillars of the country’s economic development; neither did they hesitate in sacrificing the livelihood of tens of families who are inevitably led to unemployment.”

The company said because of the economic crisis in general and the legal trouble in particular, the company’s revenues fell considerably and despite its financial soundness, its operations shrank significantly.

The company said it was saddened to lay off staff and vowed to fight to turn the situation around.

“Despite the adverse conditions our company is going through, it will continue its course to new successes and we are certain that justice will prevail,” the company said.

Immovable Property Tax highs & lows

Nigel Howarth
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9
Immovable Property Tax highs & lows

immovable property taxTHE CYPRUS government received a total of €100.25 million in Immovable Property Tax (IPT) payments from 232,300 private individuals and companies by the 30th November when the 15% discount period expired.

This compares with the €94 million that was collected by the end of the 10% discount period last year (5th November) and the €102.5 million collected by the 31st December last year.

According to a senior officer with the Inland Revenue Department 85% have paid their IPT obligations, while the tax due from the remaining 15% amounts to €28 million.

Changes to the law

Following a change in the law this year many thousands of people who have yet to receive Title Deeds paid IPT directly to the Inland Revenue Department rather than their property developer.

As property developers pay IPT at a much higher rate (up to 1.9%), this resulted in purchasers paying IPT at a much lower rate (typically 0.6%), while many with a small holiday apartment found they were exempted from paying IPT as the taxable value of their property holding fell below the €12,500 threshold at which the tax is payable.

This change in the law also benefitted property developers and 35% of those who failed to pay their IPT obligations last year have now settled their accounts.

Problems

Although the government has achieved it Immovable Property Tax revenue target of €100 million, changes in the law have resulted in a number of long-standing problems being recognised by the authorities:

Identifying foreign buyers

Although many thousands of foreign home buyers without Title Deeds paid IPT, their details have yet to be recorded on the Inland Revenue system. This is due to a problem that when a property is purchased by a foreigner, their passport number is used to identify them with the Land Registry – and the authorities have difficulty in confirming their identity if their passport has been renewed and given a different number.

This problem affects many foreign buyers, most of whom are British and who mainly bought in Paphos.

Two values for the same property!

Another major problem has come to light according to the official. In many cases the taxable values of deed-less properties calculated by property developers are different to the taxable values calculated by the authorities.

To overcome this problem the Department will propose changes to the law. These will require those selling properties without Title Deeds to send a form to the purchasers informing them of the details of the property that buyers can then use to register their purchase with the Inland Revenue Department. This will also enable the Inland Revenue to issue IPT notices to foreign purchasers who are not resident in Cyprus.

Nefarious developers

The editor has received a catalogue of complaints about nefarious developers grossly inflating the taxable values of properties. This problem came to the fore in 2008 when the Cyprus Property Action Group (CPAG) sought legal opinion on the matter – see Immovable Property Tax & Fraudulent Practices.

This ‘extortion’ continues to this day with at least one developer in Paphos inflating taxable values in the region of three times their ‘real’ taxable value.

Some developers refuse to supply purchasers with records of the amount paid as Immovable Property Tax (IPT) and a certificate showing the rate of IPT applicable to the property as required by the Interior Ministry. (Refer to this letter from the Interior Ministry).

Without these vital records purchasers face great difficulties when trying to recover legitimate overpayments of IPT from the Inland Revenue Department that their developers claim to have paid .

Savvas Vergas denies text charges

Editorial
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3
Savvas Vergas denies text charges
Savvas Vergas denies text charges
Savvas Vergas (photo Sigmalive)

FORMER Paphos mayor Savvas Vergas and three other defendants on Thursday denied charges relating to threatening text messages sent to witnesses in a land zoning case involving prominent businessman Theodoros Aristodemou, the owner of Aristo Developers.

Vergas, close associate Maria Solomonidou, her husband, and her father, face 11 charges including conspiracy to commit felony, threatening, and intervening in judicial proceedings.

The case was adjourned for May 22. The four defendants were released after posting bail, set at €10,000 for Vergas and Solomonidou who face more serious charges, and €5,000 for the other two.

Vergas and Solomonidou were also ordered to surrender their travel documents and their names were put on the stop list.

The charges relate to a suspected land-demarcation fraud case in Skali, Paphos.

It emerged that the plans for which the demarcation permits were issued were switched with new plans, which seemed to cede approximately 3,000 square metres, worth hundreds of thousands of euros, previously designated as green space, back to Aristo Developers.

Authorities have charged Aristodemou, wife Roulla, former municipal engineer Savvas Savva, and Aristo designer Christos Solomonides, Maria’s brother, in connection with the case.

At some point during the police investigation into the case, it emerged that two witnesses, a journalist, and Vergas himself, had received threatening messages.

Police found out that it was Vergas who bought the mobile phone used to send the messages on September 28.

Vergas admitted buying the phone, but claimed he got it for Maria Solomonidou, a municipal employee and close associate who dealt with social media and cultural events. She has since been sacked by the municipality.

She was arrested by police along with her father Elias, 64, and husband Constantinos Sifantos.

Her father sought to take the blame but authorities quickly confirmed that he had been lying.

Vergas is currently in custody on suspicion of corruption in connection with the construction of the Paphos sewerage system.

Ministers approve insolvency bills

Nigel Howarth
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2

ACCORDING to an official press release, the Council of Ministers approved two bills related to the insolvency framework on Wednesday that is designed to provide a degree of protection against foreclosure for those who have been hit by the recession.

The first bill is designed to regulate insolvency practitioners as provided in the framework that was approved by the Cabinet on 30th July and by the House of Representatives on 6th September.

The second bill revises the Companies Act through the introduction of a restructuring plan that will enable viable companies to stay in business.

Both bills are expected to be discussed by the House Finance Committee today when opposition parties will almost certainly attempt to amend the framework, which could result in disrupting the island’s bailout package once again.

The three remaining bills are anticipated to be approved and submitted to Parliament by the end of the month.

According to the terms of the Memorandum Of Understanding (MoU) agreed with its troika of international lenders, Cyprus has to pass the new insolvency laws by the end of this year. However, this appears unlikely unless opposition parties vote in favour.

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