Cyprus Parliament Voted against Tax on Deposit

Cyprus Parliament Voted against Tax on Deposit

In the evening March 19 Cyprus Parliament has finally voted regarding bank deposits tax introduction as a condition for getting financial aid from the EU. This measure was rejected by the majority of parliamentarians.

In response to the Russian authorities’ criticism at this measure the Cyprus minister of finance Michael Sarris left for Moscow for negotiations earlier by one day than it was initially planned. Earlier on the same day the German Chancellor Angela Merkel warned Cyprus against negotiating with Russia, insisting that Cyprus should discuss the situation only with the Eurogroup not involving third parties.

Cyprus refusal to adopt the Eurogroup’s conditions provoked the fall of world oil prices. The European management companies, particularly Valartis Asset Management and LGT Capital Management stated that they stopped act as brokers of Alfa Bank and Renaissance Capital due to the risk of working with companies who operated through Cyprus.

Those are not the only consequences of the situation in Cyprus. It is expected that Russia will provide some part of the necessary financial aid to Cyprus. The issue of what exactly will be provided to Russia by Cyprus in exchange for that aid remains open.

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