The fact described in the text is that the government aims to create a “fully digitised state” in order to offer quality services to citizens and businesses, facilitate the development of new knowledge-intensive sectors, increase the competitiveness of the Cyprus tax model, and meet the European Union’s targets for the green transition.
Employers in Cyprus are advocating for a comprehensive overhaul of the tax system, proposing significant changes aimed at boosting economic activity and competitiveness. They are calling for adjustments to individual tax rates, including reducing taxes on interest earned from savings to 10%, raising the tax-free threshold, introducing a “mortgage relief” program, and granting couples/single parents the option to file taxes separately or jointly. Employers are also pushing for changes to corporate taxation, advocating for the elimination of taxes on certain dividends, raising the corporate tax rate to 15%, and reducing the tax rate on dividends from 17% to 5%. They are also proposing changes to various aspects of the tax system, including lowering the capital gains tax, simplifying transfer pricing rules, and providing tax incentives for companies engaging in mergers and acquisitions, startups, and investments in the research and green sectors. Additionally, they are prioritizing green taxation with recommendations for tax breaks for investments in eco-friendly industries and incentives for purchasing energy-efficient buildings and solar panels.
Effective today, the reduced tax rate on fuel in Cyprus has expired, leading to an increase in retail fuel prices. This change coincides with the implementation of green taxation, which is expected to further raise costs. The middle class is predicted to be the most affected, but the idea that those on public assistance will be shielded from the impact is misleading. Comparisons with other countries are not valid due to differing infrastructure systems. Rising prices are a serious issue that must be confronted.
Fuel prices have surged following the termination of the government’s zero tax measure on petrol and diesel, resulting in an average increase of 8.3 cents per litre. The average price of unleaded 95 fuel was €1.413,47.
President Nikos Christodoulides met with the advisory committee on tax reform and asked for progress to be accelerated in order to reap benefits at the earliest opportunity. The tax reform aims to encourage entrepreneurship, relieve households, have a strong social character, and contribute to the fair distribution of income. The reform also aims to address tax evasion and avoidance and be fiscally neutral. The University of Cyprus has been asked to intensify the pace of work on the tax reform. The green transition and green taxation are part of the tax report, with compensatory measures under consideration. The committee assesses proposals from various groups to form a comprehensive opinion. Tax reform is not just about tax collection but aims to improve the finances of households and businesses and keep the economy competitive.
The Cyprus government is ending an 8 cent subsidy on fuels after it expires on March 31, resulting in an initial increase of 7 to 8.3 cents a litre for motor petrol and diesel, along with a 6.3c hike on heating oil. The government also plans to introduce a green tax on fuel, which has been delayed until after the summer holidays. The impact of the green taxation on businesses and households is expected to be small, with compensatory measures provided to vulnerable population groups.
Fact: President Nikos Christodoulides announced that green taxation in Cyprus will begin by the end of 2024, not on April 1 as some people had thought.
The house energy committee will debate the impact of green taxation on households and businesses in sectors such as tourism, industry, and agriculture, and the need for compensatory measures. The finance minister or his representative is invited to attend the discussion, initiated by MPs Kyriakos Hatzigiannis, Costas Costa, and Stavros Papadouris. The government will impose a tax on motor fuels of 5 cents in 2024 and on polluting industries, as well as a tax of €2.5 per night as a residence tax in the Republic of Cyprus, according to the Law on Carbon Tax on Energy Products and the Law on the Imposition of a Residence Tax. Finance Minister Makis Keravnos stated that the imposition of the green tax would be fiscally neutral with compensatory measures as part of the government’s tax reform. The Centre for Economic Research of the University of Cyprus has presented scenarios for these taxes and compensatory measures.
– The reduced fuel consumption tax, which was lowered by 8.3 cents per litre for petrol (95 octane) and diesel, and by 6.3 cents for heating oil, will end starting from 1st April.
– The consumption tax on fuel is set to be reintroduced at midnight on the last day of the current month.
– There has been a significant reduction in fuel prices in the last quarter, which stabilized two weeks ago, with very small increases observed in recent days.
– Cyprus has the cheapest fuel in Europe according to the European price observatory issued by the EU.
– VAT will be reinstated for 9 product categories on 30th April and for the remaining two categories related to meat and vegetables on 31st May.
– The public consultation on the draft law for green tax reform has been completed, with the taxation expected to be introduced within 2024, accompanied by compensatory measures decided by the Ministry of Finance.
– The termination of the reduced consumption tax on fuel is expected to lead to an increase in the retail price of fuel due to the imposition of green taxation, with an overall increase of about 10%.
– The cost for dealers will double with every one-cent increase in fuel prices, requiring them to spend approximately 2,000 euros for their stocks and monthly customers.
– The price of diesel is expected to exceed 1.50 euros per litre with the termination of the reduced VAT rate.
– The Pancyprian Association of Petroleum Dealers has requested that price adjustments be made on the first working day after their decision and not on a holiday, specifically on the 6th morning of the first working day.
Petrol prices in Cyprus are expected to increase by 14 cents per litre on April 1 due to the end of a government subsidy and the potential introduction of a green tax. The initial increase will be 7 to 8.3 cents a litre for motor petrol and diesel, and 6.3 cents for heating oil. The consumption tax on fuel is set to be reinstated at midnight on March 31. An additional increase of 5 cents may occur if the new green tax is approved. The green tax is expected to start from April 1, with an annual escalation from 5 cents in 2023 to 25 cents by 2033. Cyprus ranks among the EU countries with comparatively cheaper fuel. Petrol station owners warn of further increases due to pricier fuel shipments. The fuel tax exemption, introduced in March 2022, reduced the price of petrol by 7 cents a litre, diesel by 8.3 cents, and heating oil by 6.4 cents. In March 2022, the average price of 95 octane unleaded petrol was €1.44. As of the last reported Friday, the average prices were €1.412 for a litre of 95 octane petrol, €1.508 for diesel, and €1.067 for heating oil.