At the recent Global Forum on Tax Transparency and Exchange of Information for tax purposes, held in Jakarta, Cyprus was assigned an overall rating of ‘non-compliant’.
The government has since pledged to implement the necessary actions, to improve the countries’ overall compliance in terms of tax transparency and the exchange of information for tax purposes.
The pledge was outlined in a Finance Ministry press release, following the country’s assessment at the global forum held on the 21-22nd November. As per the Ministry’s press release, the Global Forum, which is the leading international body for ensuring the implementation of the internationally agreed standard on transparency and exchange of information in the tax area, released compliance ratings for 50 jurisdictions which had completed both phases of their assessments;legal and regulatory framework and b) practical implementation of the legal framework.
With regard to Cyprus’ it was noted that “all legal and regulatory issues identified in the first phase of review were dealt with through the enactment into law of appropriate provisions, like explicitly stating in the law (in addition of common law provisions) the information that should be available on a trust, removing references to Companies’ Law which allowed the issue of bearer share warrants in public companies (a provision that does not seem to have ever been used), the need for Cyprus incorporated but not tax resident companies to file tax returns with Cypriot authorities etc. As the first phase review was completed in March 2012, the recent changes in the law in 2012, have not yet been reflected into the rating assigned.”
It was also noted that there were delays in the exchange of information with counterparts between the 1st July 2009 and the 30th June 2012. However since 2012 both personnel and procedures at International Tax Affairs Division of the Inland Revenue Department, have been reviewed to more effectively address requests for information.
“It is the authorities’ belief that for the period under review, the efforts of Cyprus in completely streamlining its regulatory framework as well as its actual performance in handling requests, which were considerable in number, should have warranted a higher rating being assigned,” the Ministry noted.
However, it said, “despite the actual current state of affairs, being much better than those arrived at during the review stage, all efforts are being made by the Ministry of Finance and the tax authorities, the accounting and legal profession, the Cyprus Securities and Exchange Commission as well as the Companies Registrar, who are working together in a coordinated manner, taking all necessary steps for significant improvements in all relevant matters.”
“In conclusion, it is our firm belief that Cyprus has already taken steps and will take all necessary additional steps to implement the required changes and ensure that during the next review stage in 2014, the assessors will note a very significant improvement on all measured parameters and have Cyprus’ overall rating changed to a much better one, than the current rating,” the Ministry said.