The delays in the refund of VAT to businesses and the liquidity problems that are created, discussed on Tuesday the Parliamentary Committee on Energy, Trade, Industry and Tourism, with members calling on the relevant authorities to resolve the problems observed, especially in the current conditions of economic crisis.
During the discussion, representatives of the Cyprus Association of Certified Public Accountants (ACCA), the Federation of Cyprus Building Contractors' Associations, the employers' organisations KEBE and OEB and the agricultural organisations PEK, EKA, New Agricultural Movement, Panagrotikos Association and Euroagrotikos, conveyed to the members of the Committee the problems they face due to the delays in VAT refunds.
In his statements after the meeting, AKEL MP Costas Kostas said that there were cases of delays of up to two years, while usually, when there are some problems with applications, it is around six months.
He pointed out that when citizens owe taxes to the state, the government demands immediate payment, and when this is delayed, it imposes heavy fines, while many times citizens who could not respond, "family men with children, end up in jail".
But when the state owes money to citizens, such as VAT refunds, income tax or payment of compensation for expropriation, it delays excessively and without any charge, he said.
He reported that business representatives, mainly from the construction industry, and farmers' organisations, as well as the OEB and the KEBE, conveyed to them the magnitude of the problem with the long delays in VAT refunds, which he said were due to the practices and procedures followed by the Tax Department.
"As AKEL, we call on the Tax Department to simplify the checks it carries out, to automate the procedures, to properly staff the Department, to further train its staff, to solve the problems mentioned today so that VAT is returned to businesses on time, especially today when the country is once again going through a very serious economic crisis," he said.
EPP MP Elias Mirianthous said in their own statements that, mainly this problem is focused on businesses involved in the construction industry and agricultural and livestock enterprises.
He explained that in the last 10 years, with the introduction of the regulation of charging 0% VAT by companies involved in the construction sector, all these companies present every period when they close their VAT tax returns, they have a large tax refund. "This tax, as long as it is delayed to be refunded to the beneficiaries creates huge liquidity problems. The same is the case for businesses in the agri-food sector," he added.
He also said that considering the problems of the last few months with the steep increase in the prices of goods, "the amounts that these businesses are required to collect back from the VAT Service are huge and create multiple liquidity and viability problems."
He said they were informed that around €375 million of VAT refunds were made in 2021 and over 90% of claims had been processed. And 60 per cent of the remaining requests, he said, related to individuals who appeared not to have generally complied with the timely filing of tax returns not only in VAT but also in annual tax returns of either the company or the individual, or had not deposited the international bank account, the so-called IBAN.
Mirianthous said that they have asked the Tax Department to find more simplified ways in the examination of these returns, but at the same time to inform all the beneficiaries who have some outstanding issues, so that they can get back the tax they are entitled to in time.
In plenary, amendment for audit procedure for small businesses
According to Mirianthous, the bill to change the audit procedure for small businesses is expected to be sent to the plenary in two weeks for a vote.
He said they reviewed during the session the proposed laws they had tabled to change the audit procedure for small businesses following some suggestions or reservations from the Income Tax Department and the Registrar of Companies. For a company to be exempt from the normal audit and come out of the review process, he added, its turnover would have to be up to €200,000, which would include rents, interest and dividends and would not include an individual sale of property or shares when such sale is not within the normal activities of the company. At the same time, he said, the amount of assets has been set at €500,000.
He explained that for a company not to proceed to an audit, but a review of its accounts, it would have to have not exceeded €200,000 per year for the last two consecutive years in terms of turnover.
"The proposed law, as it is formulated, will go to a vote in two weeks," he said. He added that it has been made clear that the same will be done for self-employed businesses, which until now are required to close audited accounts when they exceed €70,000.
As a result, he said, the Confirmation and Collection of Taxes Act is also being shaped accordingly.
The bill was tabled by Mirianthous on behalf of the EPP, Mario Mavridis, on behalf of the DISY parliamentary group, and Alekos Tryfonidis and Michalis Yiakoumis on behalf of the DPA.
Source: CNA
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