[PIO] Address by the Minister of Finance Mr Makis Keravnos at the 62nd Annual General Meeting of the Cyprus Association of Certified Public

First of all, I would like to thank you for the special honour of welcoming the proceedings of the 62nd Annual General Meeting of the Association of Certified Public Accountants of Cyprus. A professional and scientific Association, which since its establishment, for 62 years, has played a decisive role in the course and development of the Cypriot economy, and its basic cells, which are the business units.

Undoubtedly, your Association continues to make a decisive contribution to the collective effort for the recovery of the Cypriot economy as an essential partner and associate of the state. The Association of Cyprus Certified Public Accountants, during the critical periods of our country's modern and recent history, has managed through its actions, both locally and internationally, to achieve the gradual recovery of confidence and revival of the business services sector in Cyprus, as well as the prestige of Cyprus internationally. Cyprus' quality professional infrastructure in the accounting, financial and advisory professions is internationally recognised. That is why our Government considers you as a key pillar in shaping a new vision for our economy. A vision that refers to a diversified economic development model, enriched with new productive sectors, with integrated modern technology, leading Cyprus into the new era of digital and green economy.

In order to lead us to the new era, in a period of many and continuous challenges and serious geopolitical developments, we need an environment of economic stability, with viable businesses, with a reliable banking system and with quality jobs.

As you know, in order to achieve this, we need an environment of economic stability, with viable businesses, with a reliable banking system and with quality jobs. A few days ago, I participated in the Eurogroup and Ecofin meetings where, in the context of the post-programme assessment of the Cypriot economy, the institutions of the European Union noted that our economy is following a stable growth path, which will continue in the coming years.

A few days ago, I participated in the Eurogroup and Ecofin meetings where, in the context of the post-programme assessment of the Cypriot economy, the institutions of the European Union noted that our economy is following a stable growth path, which will continue in the coming years. They stated that our economy remains reliable and capable of meeting all its European obligations.

According to our baseline macroeconomic scenario, which is fully in line with the European Commission's recent spring forecasts, Gross Domestic Product growth will continue at a positive rate of around 2.8%. A rate that is about 3 times the euro area average, which is set at 1%.

The fiscal balance remains in surplus and is estimated at 2.3% of GDP on average over the period 2023-2026. Public Debt is estimated to decline from 86.5% in 2022 to 81.1% of GDP by the end of 2023, with a downward trend approaching 60% in 2026.

By no means does the Government ignore the challenges and risks, such as inflation and interest rate increases by the European Central Bank. These are also the aftermath of the war in the heart of Europe due to Russia's invasion of Ukraine. Through manipulation and measures, the government has managed in a short period of time to tame inflation, which is currently just above 3% and is estimated to fall to around 2.5% by the end of 2024. Of course, structural inflation remains higher at 4.9% and is the main reason for the accuracy along with higher interest rates. However, the government has not been apathetic to precision but, through a series of effective measures, has given a breathing space to middle households and middle workers. I respect your time and will not mention them, because they were very graphically analysed by our President in his press conference yesterday.

A particularly important part of the Government's programme, which has been a constant demand of your Association in recent years, is tax reform. It is the Government's intention that the new tax proposal should take account of the modern economic model and its evolutionary prospects. The new tax reform should aim for a transparent and simplified system, with minimal bureaucracy. It should encourage entrepreneurship and at the same time be socially fair, in line with European standards and aimed at reducing tax evasion and avoidance.

We look forward to it being a mechanism for improving the equal distribution of output and income, strengthening social cohesion and encouraging and facilitating investment activity. Finally, it should be fiscally neutral and characterised by stability, in order to be an advantage as an incentive for foreign and local investors. This work has been assigned to the Centre for Economic Studies of the University of Cyprus, which will also make use of foreign experts.

Rest assured that at the appropriate time we will seek the involvement of your Association and make use of your views and all the expertise that we recognize that your members possess.

At the same time, the Ministry of Finance is promoting the Neutral Green Tax Reform, which will significantly contribute to the achievement of our Cyprus' green targets within the European Union, stemming from the Green Deal and the National Energy and Climate Plan for 2021-2030, for a 24% reduction in greenhouse gas emissions.

The focus of the government's development strategy is guided by the implementation of the two flagship Public Investment Programmes, the National Recovery and Resilience Plan and the THALIA 2021-2027 Programme. Two programmes that implement plans and actions on the basis of the Long Term Development Strategy for Cyprus.

The Long-Term Strategy for the Sustainable Development of the Cyprus Economy, entitled "Vision 2035", supports the promotion of digitalisation and environmental sustainability with the main objectives of transition to a new, modern economic model, the creation of new jobs, the achievement of sustainable long-term growth and the strengthening of international competitiveness with the ultimate goal of the well-being of citizens.

Especially with regard to the recent sanctions on individuals, the Government reacted immediately and decisively. It saw this negative development as an opportunity to finally clear the name of Cyprus as a country providing quality professional services. Having before me professionals who excel in the field, I consider it my duty to assure you that the Government is making every effort to safeguard the reputation of Cyprus as an international service centre.

Our Government, aiming in this direction and ensuring even more the attraction and stay in Cyprus of foreign companies and their executives, despite the four months of government, immediately proceeded to new measures and manipulations.

1. Extended the tax incentive to foreign executives of these companies also in case they change employer. The relevant bill will be put to the plenary session of the House of Representatives tomorrow for a vote.
2. A tax bill has been submitted to the House of Representatives, which, if passed, will grant increased capital allowances on assets that will improve the energy efficiency of companies.
3. Directly advance a Funds Administrators Bill to regulate the profession of performing the administrative functions of Collective Investment Schemes. Within the next week it will be submitted to the Legal Service for legislative and technical examination.
4. A draft law establishing a framework for the control of Foreign Direct Investment (FDI) is being prepared, following consultations with the FDI Committee, among others.

In conclusion, I thank you for your attention and wish you every success in the work of your General Assembly.

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