Nicosia, Cyprus. The Cyprus Chamber of Commerce and Industry (Keve) said it opposes the proposed imposition of additional taxation on banks, arguing it would not be a sound economic choice. The chamber said taxation should not be used as an instrument of social policy.
Keve’s position and tax contribution figures
Keve said that “any form of taxation cannot under any circumstances serve as an instrument of social policy”. It added that the banking sector has already paid significant tax burdens during the period 2017 to 2024.
According to the chamber, banks contributed €285 million in corporate tax and €470 million in special levy on deposits over that period, amounting to a total contribution of €755 million. Keve said this provided the state with substantial resources to support borrowers and vulnerable groups without the need to impose further taxation.
Concerns over framework stability and investor message
The chamber said additional taxation would harm the stability and predictability of the tax and institutional framework. It warned that such a move would send a negative message to international investors and undermine the country’s credibility.
ECB reference and potential pass-through to borrowers
Keve said there is a risk that the cost could be passed on to borrowers, citing concerns highlighted by the European Central Bank. It referred to an ECB opinion published in December of the previous year on an increase in a tax imposed on credit institutions.
The ECB said raising taxation on banks based on customer deposits could have implications extending beyond fiscal policy and into the functioning of monetary policy.
How do you think additional taxation on banks could affect borrowers in Cyprus?