Tax reform takes centre stage at FMW conference

The ongoing tax reform process, the first in over twenty years, was the focal point of a conference organised this week by FMW.

The event saw participation from technocrats from the Ministry of Finance, tax services experts, representatives of political parties, trade unions, and employers’ organisations.

Addressing the conference, Finance Minister Makis Keravnos emphasised that the aim of the tax reform is to create a fairer and simpler system that promotes a more equitable distribution of the tax burden, maintains the sustainability of public finances, and enhances the growth prospects of the economy.

In a speech read by the Head of the Tax Policy Unit, Naya Symeonidou, Keravnos outlined the main pillars of the reform.

These include broadening the tax base, increasing employment and the competitiveness of the Cypriot economy within international and European standards, promoting innovation and the green transition with evolutionary prospects, and ensuring a fairer distribution of the tax burden through a simplified tax system that reduces administrative overhead for taxpayers.

“We aim to create a tax model that is fairer and promotes transparency for both Cypriot taxpayers and the international community,” Keravnos explained.

He mentioned that the work assigned to the Economics Research Centre of the University of Cyprus (CypERC) is expected to be completed by the end of the first half of 2025, with the new proposed tax framework being submitted to Parliament.

The progress of the work will be presented in autumn 2024 at the third conference between the Ministry of Finance and the Economics Research Centre.

Keravnos called on all stakeholders to submit their opinions, emphasising the importance of societal involvement in this effort.

Concluding, the Finance Minister assured that there will be full transparency at all stages of the process.

Meanwhile, in his speech, Kyriakos Iordanou, the General Director of the Institute of Certified Public Accountants of Cyprus (Selk), stressed that the association’s proposal is to re-examine the entire spectrum of taxation and existing procedures and practices, aiming for a comprehensive, horizontal, and practically applicable solution.

Referring to the rapidly changing international landscape at the level of the Organisation for Economic Co-operation and Development (OECD) and the G20, Iordanou highlighted that Cyprus must adapt to the new conditions to remain relevant and aligned with these developments.

Among other issues, he reiterated the need to establish a tax council responsible for creating a national tax strategy, as well as the formalisation of the tax advisor profession.

He added that the simplicity, flexibility, stability, and predictability of the new system are essential pillars for attracting foreign businesses and investments, boosting competitiveness, and fostering economic growth in the country.

Finally, Rena Makri, a tax officer from the Finance Ministry, provided an analysis of the various stages of the project being conducted by the Economics Research Centre, including discussions with stakeholders, green taxation, and the analysis of tax reforms in other countries in recent years.