THE GOVERNMENT’S tax amnesty for undeclared accounts has raised three million pounds so far but time is running out and the sum collected remains far from the estimated £50 million of hidden capital that is hoped to flow back in the economy by 2005.
Parliament passed a tax amnesty bill last July encouraging people who have secret accounts to declare them under a favourable taxation regime while at the same time it voted in a bill partially eliminating banking confidentiality in an effort to clamp down on tax evasion.
Tax evaders have until December 6 to take advantage of a five per cent tax levy on secret accounts, after which, and only until the end of the year, it will be set at 6.5 per cent.
The government hopes the tax amnesty will accrue £50 million in 2005 as part of a series of measures designed to reduce the fiscal deficit to levels that will allow the island to join the euro in 2007.
The head of the tax declarations office, Theophilos Theophilou, said yesterday he had received some 400 statements so far. In total people have declared around £60 million from secret accounts, of which, the state has received £3 million.
“There was a rough expectation of extracting around £50 million from the project but it is very difficult to estimate how much is out there,” said Theophilou.
The office expects business to pick up closer to the first deadline of December 6.
“We have had a lot of interest from people coming here and collecting forms. So we expect many more statements to come during November, as the deadline gets closer.
It’s difficult to predict really what the final sum will be,” he added.
The Finance Ministry took out full-page ads in local papers yesterday encouraging tax evaders to seize the ‘window of opportunity’.
Under the heading, “Declare everything… declare it now… and enjoy it for ever!” the ministry promises that no questions will be asked or explanations sought, and says that declarations will be confidential, with the added bonus of being within the law.
The tax amnesty is open to anyone who for whatever reason did not state their income or profits to the Inland Revenue Department for any tax year up to 2002, within and outside Cyprus.
Evaders are encouraged to declare money in secret accounts or which was used to buy property (moveable or fixed) or as a loan. The window closes on December 31, 2004.
For more information, call the tax declarations office on 22-445 214.
For those who aim to continue keeping secret accounts, measures against tax evasion are now in place with the Elimination Of Banking Confidentiality Bill, which allows the Inland Revenue (IR) to secure access to and information on bank accounts of citizens suspected of tax evasion. Under the new rules agreed by the House Finance Committee, the IR can either apply to a three-member committee or present its case to court without the extensive delays experienced in the past. Banks that fail to provide the necessary information will be penalised.
An estimated £1.5 billion is supposedly hidden in secret accounts in Cyprus.
