Strong disagreements with aspects of the government’s proposed tax reform came to the fore on Monday, as parliamentarians were again urged to vote through the legislation by year’s end.
MPs began reviewing the six government bills comprising the much-touted overhaul of the tax system, which the government is keen on having passed before the end of the year so that it can kick in on January 1, 2026.
Faced with the tight window, parliamentarians asked an official from the attorney-general’s office if might be possible to pass the bills in early 2026 – with the legislation still taking effect as of January 1.
The official replied that enacting the legislation anytime after January 1 would lead to “legal complications”.
And she appealed to MPs to pass the bills prior to January.
It did not go down well with a number of opposition MPs, who complained that their backs are against the wall.
Akel’s Andreas Kafkalias said tax reform was a matter highlighted by the current administration from the moment it took office in early 2023.
Yet only now – meaning in late October of this year – did the government table the bills to parliament.
This left the House finance committee a mere ten sessions to comb through the mammoth bills and then take the legislation to the plenum for a vote.
“Under no circumstances will we go through this in short order, just because the calendar year is coming to an end,” Kafkalias asserted.
The Akel MP also censured the content of the proposed tax reform, arguing that it fails to tackle a fundamental issue – growing income inequality.
“As the bills stand today, they do not satisfy us.”
Disy’s Harris Georgiades likewise expressed frustration with the late hour at which the government submitted the bills.
But he said his party would nonetheless do its utmost to have the bills passed by the end of the year.
Elam MP Sotiris Ioannou said his party would table amendments to the provisions relating to tax relief for families with children.
The tax credits in the government bills are insufficient, he added.
Under the proposed tax overhaul, families can get tax credits of €1,000 per child (or €2,000 for single-parent households); €1,000 per student child (in full-time education); a €1,500 deduction for interest on performing loans or rent for a primary residence; and a €1,000 deduction for energy upgrades or electric-vehicle purchases.
Eligibility for these deductions applies to households with annual family income below €80,000, large families below €100,000, and single individuals below €40,000.
Also present in parliament were a number of professional organisations.
The bar association voiced opposition to the intended increase of corporate tax from 12.5 to 15 per cent.
Responding, George Syrichas of the University of Cyprus Economics Research Centre – which helped the government design the tax reform – said their own analysis found that raising corporate tax to 15 per cent would not harm the competitiveness of Cyprus-domiciled companies.
More criticism of the tax bills came from the Property Developers Association. In a memo they sent to be read out in parliament, the association objected to the restrictions on the transfer of properties in the even that either the disposer or the receiver are not fully compliant with all their tax obligations.
The association asked for this clause to be stricken as in their opinion it is excessive.
The government contends that its sweeping tax overhaul will broaden the tax base, toughen enforcement and ease the burden on households and businesses.
Among other things, the changes would see the tax-free threshold raised from €19,500 to €20,500.
