Tough times ahead on EU tax harmonisation

CYPRUS is “top of the class” of EU candidate-members, the visiting chief of the EU’s accession talks team said yesterday.

But Austrian Leopold Maurer also warned of some testing times to come as Cyprus moved to harmonise with Europe on taxation and the free movement of capital.

“These are two very important issues, very complicated ones, because, in the taxation field, for example, you have to change your whole system,” Maurer told journalists after a morning meeting with the House Foreign and European affairs committee.

“In the EU the minimum VAT is 15 per cent, you have 8 per cent. To bring together the two rates is a very difficult task and we have to be very careful,” Maurer said.

Maurer arrived with a team of EU officials for a three-day official visit on Wednesday evening. His remit is to review Cyprus’s progress towards EU harmonisation.

Restrictions in the movement of capital, and especially restrictions on interest rates, had to be lifted, Maurer said. There was much to do by the 2003 accession deadline, he said, so efforts had to begin now.

Committee chairman Tassos Papadopoulos said he was satisfied with the meeting with the EU official, and echoed Maurer’s call for a redoubling of efforts towards accession.

He denied suggestion’s Maurer was turning the screw on Cyprus: “There is no pressure, he just explained that you cannot act at the last minute.”