Cyprus Approved New Austerity Measures

Cyprus Approved New Austerity Measures

Cypriot parliament approved new austerity measures, including further increases in value-added tax and amending the country's Immovable Property Tax regime.

From January 1980 till now the Immovable Property Tax was based on property values, but within the approved austerity measures these valuations will be multiplied by about 3.5, which represents growth in the Consumer Price Index from 1980 to 2012. New taxation rates will be set at 0.6% from EUR 150,001 to EUR 500,000, at 0.8% from EUR 500,001 to EUR 1 mln, and at 1% thereafter. In addition, property owner will be taxed on the total amount of property registered in their names.

The government assures that most Cyprus citizens will not be affected by the revised valuations, and that businesses will see only small increases in tax payable. But hotel owners and developers argue that the hike will be substantial.

VAT will raised by 1% to 18% from January 01, 2013, and by a further 1% a year later. The reduced VAT rate of 8% will also be increased by 1% from January 01, 2014.

The excise tax for tobacco and alcohol will also be hiked: by 150% for rolling tobacco (from EUR 60 per kilogram to EUR 150), and for pure alcohol from EUR 598.01 per 100 liters to EUR 956.82. The tax on beer and cigarettes will also be increased.

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