ACCOUNTANTS yesterday voiced concern that a €1,000 tax on companies would harm Cyprus’ image on the international stage as a business base with an attractive tax rate.
“The services and foreign investment sector is probably the biggest in the economy at the moment,” said Theodoros Parperis, chairman of the Institute of certified Public Accountants (ICPAC) following a meeting with Finance Minister Charilaos Stavrakis.
ICPAC is concerned that if the government goes ahead with its plan to tax all companies that have shown profits in the past three years €1,000 per year for two years it would drive international investors away.
“Stability of the tax law is what helped us all these years to build the sector and the last thing we want are changes,” Parperis said.
The tax aims to fetch the government around €200 million in 2011 and 2012, but accountants say it would indicate instability of the tax system – a major attraction for the thousands of foreign companies based in Cyprus.
Cyprus’ 10 per cent corporate tax is the lowest in the EU.
There are around 170,000 companies registered in Cyprus with 70 per cent being foreign.
Parperis stressed that ICPAC wanted to help the government boost its revenues, without changing the tax system.
“We can find solutions that are also effective in bringing the revenues the government seeks without hurting our image,” Parperis said.
Accountants have proposed the introduction of a levy paid to the company registrar when businesses submit information.
They say the levy should be much smaller and did not object it being permanent.
Stavrakis stressed that tax rates would not change “as this is an important comparative advantage for the Cypriot economy.”
The matter will be discussed again in a wider meeting next week while Stavrakis is scheduled to see lawyers today.
Meanwhile the Cyprus Investment Promotion Agency (CIPA) expressed doubts on how the measure would be implemented, saying some things are easier said than done.
CIPA vice chairman Christos Mavrellis said the organisation had not been briefed yet but wondered how easy it would be to implement and how efficient it would be or what side-effects it could have.
“It sounds easy but I do not know how it will be implemented,” Mavrellis said.
And for groups that include 50 companies with various levels of profitability it would not be €1,000 but €50,000, he said.
He also said that in the past two years accountants and lawyers who offer services to companies have been under huge pressure to cut their charges.
“We should not take so lightly that €1,000 is nothing,” the CIPA official said.
The government plan was blasted by representatives of small and medium businesses.
“Someone else decided on behalf of 67,000 SMEs on what measures should be taken,” said POVEK’s Stefanos Koursaris. “They’ve sorted themselves (big companies) out and the government settled by a steamrolling and unfair approach.”
