Cyprus-Forum.com

[coredump]

http://www.cyprus-mail.com/news/main.ph ... &archive=1

‘Cyprus tax law is a riddle’
By Jean Christou
(archive article - Wednesday, February 8, 2006)

PwC: current system a deterrent to foreign in investment LEADING accountants PriceWaterhouseCoopers (PwC) said yesterday the island’s tax system was a complete riddle, unfair, and a deterrent to foreign investment. PwC revealed that for every £1 spent in Cyprus by an international company, 50 cents goes to the state, even before the company’s profits are taxed. The global firm said it had put together a complete overhaul of the system based on a report comparing Cyprus as a financial centre with the UK, Ireland, The Netherlands, Luxembourg, Jersey and Guernsey. “The aim is to launch a dialogue with the government on this vital issue for the future,” said PwC executive consultant Phidias Pilides during a presentation in Nicosia yesterday. “We have prepared a plan. We know the direction we should be headed because not much being done and this is a cause for concern. Cyprus is unable to face competition adequately and it’s becoming more fierce>” Pilides said the PwC proposal covers the entire tax system in Cyprus, which he said needed to be more flexible. According to Pilides, all ambiguous references in the tax laws needed to be removed, the law needs to be simplified and made more efficient, injustices must be lifted and tax evasion needs to be better combated. “We have prepared even the amendments to the law where there is alack of clarity,” he said. “The government’s system is not clear and it will put off investors. The tax system is a riddle.” Pilides said the Cyprus tax system was not fair to the taxpayers. “They say the burden of proof rests with the taxpayer and the case of returns is a point of friction,” he said. “What foreign companies want is a friendly flexible framework in which they feel welcome.” When compared to the other six countries in the study, Pilides said it was clear that Cyprus did not offer the infrastructure required by the investment industry. “We attract subsidiary companies but not investment companies,” he said. “It seems we are losing ground compared to our competition . We want the public sector to be more involved. This is a huge challenge. We don’t have the reputation or the infrastructure enjoyed by these countries. Precious ground has already been lost and we need to act immediately.” Pilides said one of the biggest problems in Cyprus compared to the other six, was the lack of the necessary banking infrastructure and the lack of a tradition in the investment sector. “These cannot be obtained in the short or medium term unfortunately,” he said. Finance Minister Michalis Sarris, who addressed the Nicosia presentation said studies such as the PwC one must be supported in order to help Cyprus become established as a regional financial centre. “The survey makes a useful comparison with countries that are successful and stresses our weaknesses in the area of attracting investment funds,” said the Minister, adding that it identified the points that must be focused on to become more attractive. “Cyprus is at a crucial turning point with regard to the development of the economy and it has the opportunity to develop into a very important financial centre to cover the Middle East and eastern Europe,” Sarris said. “This dual role that Cyprus plays can become an advantage. The introduction of the euro will create the necessary conditions to create economic stability in conjunction with a favourable tax rate can offer a stable and favourable environment in which they can be active. We must continue to enrich the comparative advantage of Cyprus and improve the infrastructure and services we offer. We cannot remain indifferent.” ?? ?? ?? ??

Copyright © Cyprus Mail 2005