The upcoming tax reform in Cyprus is set to move forward as Finance Minister Makis Keravnos announced that the relevant legal bills are expected to be completed within the next few days.
- The upcoming tax reform in Cyprus is set to move forward as Finance Minister Makis Keravnos announced that the relevant legal bills are expected to be completed within the next few days.
During a recent meeting on Wednesday, Keravnos, alongside the tax commissioner, engaged with the general secretariat of trade union Sek. The discussions centred around the supplementary proposals submitted by Sek regarding the tax reform. Keravnos described the meeting as highly productive, stating, “they had a very productive discussion focused exclusively on the tax reform.”
Keravnos noted that both sides exchanged valuable ideas that could enhance the final outcome of the reform. “Many clarifications were given in all directions, both from the ministry and Sek’s leadership,” he added, indicating that this dialogue would facilitate a smoother process leading to the submission of the tax reform package to parliament.
Andreas Matsas, general secretary of Sek, expressed gratitude for the opportunity to present additional proposals aimed at ensuring the reform is balanced, comprehensive, and socially fair. He emphasised the need to prioritise the fight against tax evasion, suggesting that this focus could pave the way for more thorough tax reforms.
Matsas highlighted the importance of supporting vulnerable groups within the population, noting that nearly half of the workforce may not directly benefit from the reform. He pointed out that compensatory benefits would be created to make the reform as comprehensive as possible. “Sek remains at the minister’s disposal to assist further in completing the tax reform smoothly while also supporting the most vulnerable groups,” he stated.
The meeting also connected the tax reform with ongoing discussions regarding pension reforms, specifically concerning provident funds, to ensure that there would be no adverse effects on the institution. Matsas stated that they successfully secured regulations for ex gratia compensations to benefit entitled employees.
When pressed by journalists about specific examples of Sek’s supplementary proposals, Matsas suggested that these would be more impactful once reflected in the final product presented by the Finance Ministry.
Keravnos confirmed that the bills are currently under legal review and are anticipated to be finalised shortly. He acknowledged that some modifications might occur as consultations continue. “Of course, the main framework and philosophy of the tax reform remain the same,” Keravnos clarified, while allowing for adjustments in individual issues through ongoing discussions.
Questions arose about whether amendments could still be made to the bills. Keravnos reassured that changes can always be made until the last moment, comparing the process to submitting the state budget to parliament, where revisions are common even after submission.
When asked if tax incentives for businesses to implement the Cost of Living Allowance (CoLA) system were under consideration, Keravnos stated that this issue was not on the agenda during the meeting. However, he acknowledged that the reform already includes reliefs and rationalisations for corporate taxation, leaving businesses to decide how to utilise these benefits.
Matsas deemed the question about CoLA incentives reasonable and emphasised the need for productive discussions in upcoming meetings with the Finance and Labour Ministers. He expressed hope that these discussions would lead to positive developments, reinforcing the importance of a functioning institutional framework for social dialogue to support smooth labour relations.
As the timeline for the tax reform progresses, the collaborative efforts between the Finance Ministry and Sek continue to shape a reform package that aims to address the needs of various stakeholders within Cyprus.
