Costas Markides and Marios Andreou on the philosophy and rationale behind the proposed tax reform

‘The Path to the Tax Reform and the Future Ahead’ was the topic of a discussion between tax experts and members of Cyprus’ Tax Reform Advisory Committee, Marios Andreou and Costas Markides.

Speaking at the 8th Cyprus International Tax Conference, the two experts analysed the challenges overcome during the preparation of the reform, as well as the impact of the new tax system on businesses and the Cypriot economy.

They stressed the importance of adapting to international tax policy and the opportunities created for Cyprus.

Marios Andreou stated that Cyprus's competitiveness is not negatively affected by the tax reform, on the contrary it is strengthened.

Marios Andreou

"Regarding the 15% (the figure to which corporate tax will be raised in line with the proposed reform), I understand the concerns, but we need to analyse it in its essence. It does not seem to reduce competitiveness compared to other countries. On the contrary, it is a significant improvement," he said.

Regarding the next steps, he stated that proposals and recommendations from stakeholders are expected next week.

Regarding comments about holistic change, Andreou clarified that this is not a complete restructuring, but a holistic review of the tax system and comparison with other models.

He explained that the Commission team carefully studied the tax philosophies of other countries' systems, such as that of Estonia, which is quite different, however some of its provisions were incorporated into the Cypriot reform.

"We need to examine the overall picture of the economy, and we are confident that we have maintained Cyprus' competitiveness against other countries," he said.

At the same time, he stressed that the reform had to comply with EU obligations.

Costas Markides presented the pillars of the reform, which are divided into two main sets: The first concerns the taxation of individuals and the second the reform of corporate taxation.

Costas Markides

The first goal was to improve the international image of Cyprus, which, as he mentioned, has also been underlined by the President of the Republic.

The second objective was to strengthen the country's competitiveness, while the green transition was also an important factor in corporate tax reform.

Referring to the increase in corporate tax to 15%, he explained that they tried to find the golden mean, balancing between reducing other tax burdens and maintaining fiscal balance.

In closing, Markides warned that the biggest risk is a delay in implementing the reform.

"We must immediately submit our proposals to Parliament and not leave all issues open until the moment of voting. There must be preliminary agreements with the main political parties before the final voting process," he recommended.

As mentioned above, the discussion, which was moderated by the General Manager of ICPAC, Kyriakos Iordanou, and took place as part of the 8th Cyprus International Tax Conference held in Nicosia on 11 March.

(Source: InBusinessNews)