ECONOMY

Cyprus takes on tax evaders

NICOSIA (Reuters) – Cyprus will get tougher with tax evaders and may introduce tax on the Orthodox Church’s estates in a bid to boost sagging revenues, its finance minister said yesterday. The strategy is included in a fiscal consolidation program Cyprus has introduced to rein in a bulging fiscal deficit forecast to hit 5.4 percent of gross domestic product this year. Cyprus joins the European Union on May 1, 2004. The fiscal shortfall exceeds a 3 percent limit set by the European Union to meet criteria for joining the eurozone. Nicosia hopes to reduce the deficit to 2.2 percent by 2006, thereby allowing it to join the single-currency area by January 2007. Finance Minister Marcos Kyprianou said authorities would hit at tax evasion through the mandatory introduction of receipts for payments. Taxpayers will face fines if they avoid submitting timely tax returns, he said. Between 30 and 40 million Cyprus pounds ($60-$80 million) in additional revenue is expected from the first year of its introduction. «We are not introducing new taxes but putting existing legislation to more efficient use,» Kyprianou told journalists. He said that the State was contemplating taxing the business activities of the Church, which has interests ranging from stakes in mines and cement production plants to breweries. Part of the changes will also see a partial easing of banking secrecy laws for inland revenue purposes. «We have an obligation to give information on the bank accounts residents of EU states may have here and, therefore, the same must apply for Cypriots,» Kyprianou said. Cyprus is considering tax breaks on inland revenue payments for Cypriots who come clean on accounts held abroad and untaxed. Details of that plan have yet not been disclosed but Finance Ministry sources told Reuters holders would have the option of paying a lower tax rate, or face the repercussions if they were found out.