by Ulrika Lomas, Tax-News.com, Brussels

09 October 2017

Cyprus should consider reinstating the immovably property tax to boost revenues, the International Monetary Fund has said.

Taxpayers in Cyprus previously had to pay an annual tax linked to the total value of all immovable property owned. The tax was substantially reduced in 2016 and withdrawn completely this year.

The IMF has recommended that “reinstating the recently rescinded immovable property tax and raising transfer duty on immovable property would provide additional countercyclical tools.”

On the finance sector, the IMF said: “Cyprus’s role as a business and financial hub could be adversely affected if new international initiatives are agreed on corporate taxation,” likely referring to the European Union’s reintroduced proposal for a common corporate tax base, talk of a common EU corporate tax rate (although highly unlikely to be adopted), and the EU’s proposed new taxes for digital economy firms.

Cyprus also would suffer from further cuts by foreign correspondent banks in relationships with Cypriot banks. However, it said finance sector growth prospects could be significantly boosted if development of offshore hydrocarbon deposits proves financially viable.