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Employers are advocating for a comprehensive overhaul of the tax system, proposing significant changes aimed at boosting economic activity and competitiveness. Here's a breakdown of their proposals:
Individual Taxation
Employers are calling for adjustments to individual tax rates, including reducing taxes on interest earned from savings to 10%. They also propose raising the tax-free threshold to account for the increased cost of living over the past two decades. Additionally, they recommend introducing a "Mortgage relief" program to allow homebuyers to deduct loan interest from their taxable income, potentially increasing disposable income and stimulating economic activity. Furthermore, they suggest granting couples/single parents the option to file taxes separately or jointly. Lastly, they're urging authorities to seek VAT exemptions on land sales from the European Union, aligning with practices in other European countries.
Corporate Taxation
Employers are pushing for significant changes to corporate taxation, advocating for the elimination of taxes on certain dividends that impose a burden on companies. They suggest raising the corporate tax rate to 15% to comply with EU regulations. Additionally, they propose reducing the tax rate on dividends from 17% to 5% to level the playing field for Cypriot companies. They also recommend making the 50% deduction on transfer fees permanent to support businesses.
Other Key Proposals
Beyond individual and corporate taxes, employers are proposing changes to various aspects of the tax system. They suggest lowering the capital gains tax to 15% and aligning it with corporate tax rates to simplify tax administration. They advocate for simplifying transfer pricing rules for small businesses and allowing companies to carry back losses for up to three years and carry them forward for 10 years. Furthermore, they propose tax incentives for companies engaging in mergers and acquisitions to enhance competitiveness. Additionally, they call for tax breaks for startups and investments in research and green sectors. Lastly, they emphasize the need to streamline municipal taxes and revise stamp duty laws.
Focus on Green Taxes
Employers are prioritizing green taxation as part of their proposed reforms. They recommend tax breaks for investments in eco-friendly industries and incentives for purchasing energy-efficient buildings and solar panels. They also propose tax credits for using renewable energy sources and green technologies to promote sustainability.
Overall Tax Strategy
The proposed reforms aim to simplify the tax system, make it fairer, and enhance economic competitiveness. Employers stress the importance of maintaining competitive tax rates to attract investment and foster economic growth. They emphasize that these changes are essential for creating a conducive environment for businesses and individuals alike.
These proposals represent a significant effort to revamp Cyprus's tax system, to drive economic growth and prosperity.
[This article was translated and summarized from its original Greek written by Kathimerini's Finance Editor, Panayiotis Rougalas]
