Keravnos confirms adjustments possible before final submission

The relevant legal bills for Cyprus’ upcoming tax reform are expected to be completed within the next few days, according to Finance Minister Makis Keravnos.

The bills are currently being reviewed by the legal service, the minister added.

Keravnos, accompanied by the tax commissioner, held a meeting on Wednesday afternoon with the general secretariat of trade union Sek, at the latter’s headquarters, where the union submitted its supplementary proposals regarding the tax reform.

Speaking after the meeting, the minister said “they had a very productive discussion focused exclusively on the tax reform“.

He added that “they heard many interesting ideas that sparked further thought and said the exchange of views on such serious issues helps everyone improve the final outcome“.

Keravnos also said that “many clarifications were given in all directions, both from the ministry and Sek’s leadership”, which, he said, “will help everyone proceed and finalise the process in time to submit the tax reform package to parliament”.

Sek general secretary Andreas Matsas, in his remarks, thanked the Finance Minister and the tax commissioner for the “substantive, fruitful and productive meeting”, which allowed the union to present additional proposals to the minister in an effort to “ensure that the reform is as balanced, comprehensive and socially fair as possible”.

Moreover, he said the that meeting also provided the opportunity to clarify many of the questions raised before the minister and the commissioner, while also highlighting “the importance of prioritising the fight against tax evasion”.

“This will allow us, through this component, to create more positive prospects for an even more comprehensive tax reform,” he said.

He added that this approach “aims to support vulnerable groups of the population, including nearly one in two workers who will not directly benefit from the reform, through the creation of compensatory benefits to make the reform as complete as possible”.

Matsas added that “Sek remains at the minister’s disposal to assist further in completing the tax reform smoothly while also supporting the most vulnerable groups”.

He also said that the meeting “helped connect the tax reform with the ongoing debate on pension reform, placing special emphasis on provident funds to ensure that there will be no negative impact on the institution”.

The union chief further stated that they also secured the regulation of ex gratia compensations in a way that benefits entitled employees.

“It was therefore a comprehensive discussion and arrangement that will have positive outcomes for all those affected,” he said.

Asked by a journalist to give examples of Sek’s supplementary proposals, Matsas said it was “more important for these suggestions to emerge through the final product that the Finance Ministry will present, which would be evaluated in due course”.

When asked if any changes had been made to the bills currently under legal review, Keravnos said “it was natural for some modifications to occur while consultations continue“.

“Of course, the main framework and philosophy of the tax reform remain the same,” he said. “Certain individual issues, however, may be adjusted through these discussions.”

Asked where the bills currently stand, the minister said they are at the legal service and are expected to be completed within the next few days.

When asked whether amendments could still be made, Keravnos said “amendments can always be made until the last moment.”

He compared it to submitting the state budget to parliament, where, as he said, “changes are made every year after submission”.

Asked whether incentives could be provided for businesses to implement the Cost of Living Allowance (CoLA) system, the minister said that the issue was not on the agenda that day.

When a journalist commented that tax incentives for businesses to implement CoLA could fall under the scope of tax reform, Keravnos said that the reform already includes reliefs and rationalisations for corporate taxation, leaving it to businesses to decide how to utilise these benefits.

Matsas said that “the question was reasonable”, adding that “it would be more productive if issues related to the pending CoLA discussions were concluded positively in upcoming meetings with the Finance and Labour Ministers“.

Asked whether the framework set by the government remains unchanged or if there are modifications, Keravnos said that “every discussion leads to a conclusion, which is the natural result of dialogue”.

Asked if he was satisfied with the Finance Minister’s involvement in the CoLA discussions, Matsas said it was important that steps were being taken in the right direction, with the aim of successfully completing the matter.

“The message we want to send once again is that the institutional framework of social dialogue must function in support of smooth labour relations,” he said.

“We hope things will develop in a way that allows us to keep smiling,” he concluded.