MPs on Tuesday called on the government to ease the noose on small and medium-sized companies and self-employed people who are not keeping up with their VAT and social security payments.
Lawmakers propose a long-term repayment scheme with instalments, enabling these businesses and people to gradually repay their dues to the state.
“It is not that all businessmen and self-employed people have become fraudsters overnight,” said Zacharias Zachariou, chairman of the House commerce committee.
The recession, combined with the haircut of deposits two years ago, has put the squeeze on businesspeople as a result of which today they are exposed, he added.
“We see people who did not even know where the courts were being dragged to court and to prison, and once that happens the state cannot collect,” he said.
Their proposal was therefore based on “humanitarian” as well as economic grounds.
The repayment in instalments of VAT and social security arrears should cover those dues accumulated to the present day since the outbreak of the financial crisis which, according to the MPs, began in 2008 and not 2013.
Provided that people stuck to the repayment scheme, they would not be prosecuted.
The committee will be forwarding their recommendations to the finance minister, urging him to study them “because the matter is of the utmost urgency,” Zachariou said.
AKEL deputy Costas Costa noted that such a scheme would apply to those who truly cannot cope, and not to “smooth operators” who dodge their obligations.
The MP went on to pose a question to the government: “How many big businessmen owe huge amounts in VAT and social security, and how many of these are being prosecuted, when at the same time family men and self-employed people owing tiny amounts end up in jail?”
Costa also highlighted the fact that while the state chases people who are struggling to make ends meet, the state itself takes too long – sometimes one to two years – in processing VAT refunds.
AKEL and other parties have tabled a legislative proposal that would expedite VAT rebates by the state.
The MPs’ views were shared by the association of independent accountants.
Some 30 companies owe the state about €100m in VAT, according to earlier press reports.
In June last year, parliament was told the state was owed €400m in unpaid VAT. The lion’s share – €156m –was owed by just 242 entities.
Cyprus must drastically improve tax collection as a means – among others – of paying down a €10bn international bailout.
