Tax amnesty for return of capital

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amnistiyaA new proposition that has been approved by the Government to gear up capital by offering an amnesty period till the 31st of December 2013 could be a solution to increase the liquidity needs of Cyprus. The Government is aiming for the return of liquid funds that are currently held in tax havens abroad. In accordance to a statement made from the Government spokesman: The amnesty is proposed to grant exemptions from income tax and with the return of the funds, certain conditions will be applied as to how the funds are used in Cyprus. Following on the spokesman used the scenario of ‘Funds that are brought back in the economy will have to be strategically used for paying back loans, or used for investment to liquefy the economy’. Investments could extend from five year fixed term deposits, debt securities issued by the Cyprus Government, to real estate. The importance of the decision has put pressure on the Finance Ministry, to draft the legislation to be submitted and approved by the Cabinet within coming weeks. Furthermore, Mr Stylianides stressed the importance of the decision and explained that this step is not to be perceived as a gateway for tax cheats while other law abiding citizens pay. He noted for all to take in consideration the extent of the current financial situation and the decisions that have been made. As for the proposed funds to be returned he was unsure but will be projected shortly. This is the second amnesty offered since last November, whereas a write off percentage was offered for all debt owed towards the Government between a certain time frame.