Cyprus to Collect Years of Back Taxes

December 13, 2011 Taxation in Cyprus

Tax Compliance in CyprusNICOSIA – The government of Cyprus intends to collect all unpaid taxes in the country for the last six years in an effort to lower the budget deficit by 4 percent.

While speaking to the Committee of Finance of the House of Representatives on December 11th,the Finance Minister of Cyprus Kikis Kazamias stated that taxpayers currently owe the government more than EUR 400 million in back taxes, which are planned to be recovered throughout 2012. The collections effort is intended to work in conjunction with a series of new measures aimed at improving tax compliance in Cyprus.

According to the Minister, over EUR 167.5 million of the back taxes are due from payments that were neglected last year, an additional EUR 165 of the owed taxes originate from 2 to 5 years ago, and the remaining amount is over six years old. The government’s efforts to collect the owed taxes are part of a effort to lower the national budget deficit by 4 percent in 2012.

The Minister stated that the Income Tax Department is making great strides in improving tax compliance across the country, saying that new programs have been instated to allow taxpayers to pay their owed taxes in installments. He claimed that in 2003 only 40 percent of individual taxpayers in Cyrpus met their tax obligations, while in 2010 the figure had risen to 80 percent. New programs have also been launched greatly raising tax authorities’ powers when recovering owed taxes, with several private properties already being confiscated in 2011 from non-complying taxpayers.

In an effort to change taxpayer’s perceptions on their tax responsibilities, the Income Tax Department of Cyprus in cooperation with the Educational Ministry of Cyprus will soon launch a new project whereby qualified tax experts will hold a series of lectures and discussions at high schools to reinforce and encourage tax discipline amongst youngest generation of Cypriots.

Photo by Leonid Mamchenkov