Nicosia, Cyprus. Finance Minister Makis Keravnos on Sunday called on those commenting on the government’s tax reform policy to “weigh all the data,” citing Cyprus’ obligations within the European framework.
Calls to consider EU and international institutions
Keravnos said that while the views of political parties are respected, the positions of the International Monetary Fund and the European Stability Mechanism should also be taken into account. He noted that the ESM has lent Cyprus billions and that repayments have begun this year.
He said Cyprus, as a European Union member state, is evaluated by EU institutions and must operate within the European framework, speaking in an interview with Philenews.
Proposals targeting bank taxation
Keravnos was commenting on proposals by Akel to make a second attempt to tax banks’ super profits, and a proposal submitted by Elam to increase the banks’ special tax.
He added that the European Central Bank, which supervises Cyprus’ systemic banks, has taken a negative position on the issue, and said this should be considered.
Banking sector resilience and prudential needs
Keravnos said Cyprus is among the few EU countries that continue to tax the banking system twice, through taxes on profits and super profits and with a percentage on deposits.
He said the robustness of Cyprus banks has limits, noting that banks have only recently reduced problem loans from their balance sheets and that their capital adequacy is currently in good shape. He added that additional provisions are needed and, for some banks, there may be a need for additional capital adequacy.
“All this should not escape attention when tabling any proposal,” Keravnos said.
Tax reform impact
Keravnos said the tax reform reaches the vast majority of citizens.
What considerations do you think should guide decisions on bank taxation within Cyprus’ tax reform?