Cyprus’s Tax Integrity Defended by Shiarly in midst of EU pressure

With a firm stance on securing Cyprus’s future reputation as a finance and offshore company formation centre along with attaining an international package for bailout, Vassos Shiarly, the island’s Minister of Finance, boldly denied the claims about Cyprus voluntarily promoting the laundering of money and assisting tax evasion. Also, the Minister has fiercely rejected the allegations associated with tax dumping.

Speaking in his country’s defence, Shiarly insisted that all regulations regarding money laundering have been implemented by Cyprus ever since its succession to the EU or European Union in the year 2004. He said that being quite of the critical perception coming from abroad, the government of Cyprus is determined to clarifying its obligation to fighting money laundering through better and faster implementation of the international agreements in comparison to other countries.

Rejecting the allegations associated with tax dumping in Cyprus, Shiarly argued that the island’s tax system can be counted among one of the few advantages that spring from its location.  He stressed that in order to attract capital, Cyprus must struggle, especially when it comes to the deficiency of services and industry available on the island as it’s the only chance that the country has got.
The European Commission, along with the Eurozone countries, has recently increased its pressure on the debt-ridden island for adhering to the rules established against money laundering and has lamented Cyprus’s rather low corporate taxation rate.

Certainly, the government of Cyprus has been stressed upon by German politicians for increasing the present corporate tax rate of 10% along with continual tightening of the tax avoidance and anti-money laundering legislation in order to secure a bailout. The low rate of corporate tax in Cyprus makes it an attractive jurisdiction for company formation.

Olli Rehn, EU’s Economic and Monetary Commissioner, encourages Cyprus to curb money laundering along with introducing new laws that ensure that this does not become a crisis for the country. Finance ministers in the Eurozone are likely to provide their consent on Cyprus’s rescue package at the start of March. Vassos Shiarly, Cyprus’s Finance Minister, informed that Cyprus is more likely to sign an accord with creditors worldwide over a bailout worth billions of Euros to rescue its Greece-revealed economy.

The government of Cyprus has been having talks with other labour groups and political parties agreeing to a spending cuts package along with tax measures, securing rescue funding. The amount is estimated to be somewhere between 12 billion Euros (US$15.5bn) and 13 billion Euros. It is hoped that the debts are cut slightly over 1 billion Euros by 2016’s end in comparison to the trio – the European Central Bank, the International Monetary Fund, and the European Commission – who have demanded for a 1 billion euro cut by the year 2015. It is said that the government has proposed to lessen its deficit by 40:60 tax raises to expenditure cuts, whereas a ratio of 20:80 was proposed by the trio.

Taxes driven by austerity have previously experienced a tax jump of added value of two to seven percent, with discussions of another VAT rise by the government. Investment taxes, property tax, and income have risen as well.

Cyprus has become the 5th eurozone country requesting a bailout due to its forced recapitalization of the banking system in June. The government seemed unwilling to sign an accord imposing harsh cutbacks. Cypriot President, Dimitris Christofias, was supported by the President of France, Francois Hollande, throughout the meeting where Cyprus pursued other leaders of the European Union against imposing measures of great severity on the island in exchange for the aid.

Little hope is seen in Troika negotiators agreeing to President Christofias’s satisfactory terms that will not stand for the privatizations of distended state monopolies. Thus the troika negotiators are prepared to accept new, apparently right-wing management, for taking over the power in February.