Exploring Tax Reform Proposals for a Sustainable and Equitable Cyprus
In the quest for fiscal sustainability and economic equity, Orestis Aristides, a Limassol-based entrepreneur with expertise in tourism, real estate, and finance, has proposed a comprehensive tax reform tailored to the Cypriot context. Aristides, who also holds a Master’s degree in Finance from Cass Business School, suggests that personal income tax should be restructured to support families and address the nation’s declining birth rate.
His proposal includes a tax-free threshold of €25,000 for individuals and €50,000 for families, coupled with an additional €10,000 tax break per child. To simplify the tax system and encourage high-value employees to stay in Cyprus, Aristides recommends abolishing the current tax brackets ranging from 25-35% and replacing them with a flat 20% tax on all personal income above the tax-free bracket.
Addressing corporate taxation disparities, Aristides advocates for a uniform corporate tax rate of 20%, ensuring that Cypriot entrepreneurs are no longer at a disadvantage compared to European or third-country nationals. He also proposes the elimination of dividend taxation if profits have already been subjected to corporate tax.
When it comes to real estate, Aristides highlights the issue of tax evasion by landlords and the high percentage of vacant properties in Cyprus. He believes that a fair tax on immovable property could resolve both issues by discouraging tax evasion and incentivizing property owners to rent out their vacant spaces. A suggested annual 0.5% tax on property values would equate to a 20% tax on rental income after expenses, striking a balance between fairness and financial feasibility.
The entrepreneur also touches upon value-added tax (VAT), suggesting a slight increase to align with luxury and imported goods, which could help correct the balance of payments deficit without significantly impacting GDP. Additionally, he supports the €2.50 hotel room tax but emphasizes that the revenue should be reinvested into promoting sustainable tourism.
Aristides does not overlook the environmental aspect of taxation. He proposes a flat road tax per car to fund infrastructure while advocating for carbon emission taxes on fuels to finance carbon reduction initiatives and the transition to renewable energy.
These proposals by Orestis Aristides aim to create a more equitable tax system in Cyprus that supports families, levels the playing field for businesses, and promotes environmental sustainability.
