Casino licenses, tax discounts and state guarantees for business loans are some of the ‘ingredients’ of the growth measures elaborated by the technical committee.
The committee is composed of Finance Ministry technocrats and representatives of OEB, CCCI, ICPAC and CIPA.
Their objective is to draw up proposals on growth by the end of the month.
The committee held a meeting on Friday, in the aftermath of Cyprus’s downgrade to junk by Standard and Poor’s and indications for a deeper recession of the economy.
It reviewed the technical aspects of the measures and their implementation so as to become compatible with the existing laws.
The main philosophy of the measures is to encourage businesses to make investments, offsetting the uncertainty in the business environment with the prospect of higher capital yields.
The government seeks the immediate implementation of the measures but it is exceptionally concerned about their impacts on the state funds.
Casino licenses
The opening of casinos tops the list of measures. The President’s resistance seems to have been overcome and the government is reportedly preparing a law for the licensing of casinos – possibly four or five.
The legislation will enact the tender procedure with which the government will grant licenses to domestic or foreign investors.
Tax incentives
The accelerated depreciation in businesses at the purchase of machinery, building or other equipment that will contribute to the increase in productivity will be under the committee’s microscope too.
There are also thoughts for the exemption from the tax profits invested on business activity to encourage investors and restrain unemployment.
The measures do not exclude the efforts to support the construction sector.
Small-medium businesses
The committee’s plans include the introduction of a guarantee fund for the SMEs, that is, the allocation of indirect state guarantee for low-interest rate lending. The government favours the fund but it stumbles at the lack of liquidity, despite the support by several organizations of the sector.
The government seems to be ready to promote it in order to secure a loan from the European Investment Bank.
Measures from the accountants
During the meeting, the Institute of Certified Public Accountants of Cyprus submitted a number of measures that will be examined at a second meeting in the presence of IRD Director, Georgios Poufos.
The meeting will examine the tax aspect of all measures in the committee’s agenda and ICPAC’s additional measures.
Among the proposals is the improvement of the intellectual property rights taxation for the attraction of foreign companies so as to use Cyprus in the management of those rights.
ICPC’s requests include the allocation of depreciations on the capital cost of the intellectual property rights, e.g. 25% and the allocation of a discount from the income on the intellectual property rights, e.g. 80%, as in Luxemburg.
The accountants and CIPA recommended the renegotiation or expansion of the double tax avoidance agreements with key-countries such as India, Ukraine and the US.
And new agreements with G20 countries such as Brazil, Mexico, Argentina, South Korea, Saudi Arabia, Australia, Hong-Kong etc.
Two more recommended measures are the entire exemption of the profits from permanent settlement abroad and dividend abroad from taxes, as well as the measure that provides that the who interest that a company receives to be taxed for corporate tax purposes only and the taxation of benefits in kind in both the private and the public sector, including allowances.
ICPAC also recommended the promotion of pending harmonizing legislations that will contribute to the development of businesses.
The committee’s participants admitted, however, that they cannot promote all measures immediately so as not to affect the state funds. Therefore, some of them will be promoted at a later stage.
The committee is composed of Finance Ministry technocrats and representatives of OEB, CCCI, ICPAC and CIPA.
Their objective is to draw up proposals on growth by the end of the month.
The committee held a meeting on Friday, in the aftermath of Cyprus’s downgrade to junk by Standard and Poor’s and indications for a deeper recession of the economy.
It reviewed the technical aspects of the measures and their implementation so as to become compatible with the existing laws.
The main philosophy of the measures is to encourage businesses to make investments, offsetting the uncertainty in the business environment with the prospect of higher capital yields.
The government seeks the immediate implementation of the measures but it is exceptionally concerned about their impacts on the state funds.
Casino licenses
The opening of casinos tops the list of measures. The President’s resistance seems to have been overcome and the government is reportedly preparing a law for the licensing of casinos – possibly four or five.
The legislation will enact the tender procedure with which the government will grant licenses to domestic or foreign investors.
Tax incentives
The accelerated depreciation in businesses at the purchase of machinery, building or other equipment that will contribute to the increase in productivity will be under the committee’s microscope too.
There are also thoughts for the exemption from the tax profits invested on business activity to encourage investors and restrain unemployment.
The measures do not exclude the efforts to support the construction sector.
Small-medium businesses
The committee’s plans include the introduction of a guarantee fund for the SMEs, that is, the allocation of indirect state guarantee for low-interest rate lending. The government favours the fund but it stumbles at the lack of liquidity, despite the support by several organizations of the sector.
The government seems to be ready to promote it in order to secure a loan from the European Investment Bank.
Measures from the accountants
During the meeting, the Institute of Certified Public Accountants of Cyprus submitted a number of measures that will be examined at a second meeting in the presence of IRD Director, Georgios Poufos.
The meeting will examine the tax aspect of all measures in the committee’s agenda and ICPAC’s additional measures.
Among the proposals is the improvement of the intellectual property rights taxation for the attraction of foreign companies so as to use Cyprus in the management of those rights.
ICPC’s requests include the allocation of depreciations on the capital cost of the intellectual property rights, e.g. 25% and the allocation of a discount from the income on the intellectual property rights, e.g. 80%, as in Luxemburg.
The accountants and CIPA recommended the renegotiation or expansion of the double tax avoidance agreements with key-countries such as India, Ukraine and the US.
And new agreements with G20 countries such as Brazil, Mexico, Argentina, South Korea, Saudi Arabia, Australia, Hong-Kong etc.
Two more recommended measures are the entire exemption of the profits from permanent settlement abroad and dividend abroad from taxes, as well as the measure that provides that the who interest that a company receives to be taxed for corporate tax purposes only and the taxation of benefits in kind in both the private and the public sector, including allowances.
ICPAC also recommended the promotion of pending harmonizing legislations that will contribute to the development of businesses.
The committee’s participants admitted, however, that they cannot promote all measures immediately so as not to affect the state funds. Therefore, some of them will be promoted at a later stage.
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