The Parliamentary Finance and Budget Committee met today, Monday, March 28, 2022, and discussed the following matters:
1. The Extraordinary Contribution for the Defence of the Republic (Amendment) (No. 4) Act, 2021.
(No. Fak. 23.01.062.085-2021)
The Committee continued, in the presence of representatives of relevant government departments and stakeholders, the discussion on the above bill, the purpose of which is to amend the basic law to make the reduced rate of 3% applicable, in addition to individuals, to legal persons, in the case where interest is received by pension funds, local government authorities, legal persons under public law and semi-governmental organisations, as well as to corporate securities listed on a recognised stock exchange. A revised draft bill was considered during the debate, proposing that the reduced 3% special levy rate for defence should cover the full range of issuers and ensure that interest received or credited to pension and provident funds is subject to the 3% special levy. The representative of the Association of Cyprus Banks suggested that the reduced tax rate should apply to all corporate securities, with no distinction between those listed and unlisted on a recognised stock exchange, in order to avoid unequal treatment to the detriment of smaller banks, which would have to bear the high costs of listing securities on the stock exchange. The Central Bank of Cyprus, due to the complexity of the issue, reserved its position for a later stage.
The Committee, having also considered the outline in the draft bill of a provision whereby listed securities issued by other jurisdictions would also benefit from the reduced rate, decided to allow time for further consultation among stakeholders, pending the position of the Central Bank of Cyprus. The discussion will continue at a subsequent meeting.
2.The Income Tax (Tax Dispute Resolution Mechanisms in the European Union) (Amendment) Regulations 2022.
(Doc. No. 23.03.059.012-2022)
The Committee continued its discussion of the above Regulations, the purpose of which is to comply with Council Directive (EU) 2017/1852 of 10 October 2017 on Tax Dispute Resolution Mechanisms in the European Union, concerning arrangements relating to the obligation to inform the competent tax authorities of the Member States involved in the resolution of a tax dispute.
During the discussion, a revised text of the regulations was examined, to which amendments of a technical nature were made. All stakeholders agreed on the text and the Committee will therefore take a position at its next meeting.
3. a. The Value Added Tax (Amendment) Act, 2022
(Ref. No. 23.01.063.016-2022)
. The Value Added Tax (Amendment) (No. 5) Lawof 2019.
(Proposal for a law by Mr. Stefanos Stefanou, Aristos Damianou and Andreas Kavkalias on behalf of the parliamentary group AKEL-Left-New Forces)
(File No. 23.02.060.139-2019)
The committee continued the discussion of the bill and the proposal for a law, which aim, respectively. of a dwelling with a maximum floor area of 200 m2 in the context of social policy, as provided for by the European Union Directive on the common system of VAT,
b. to correct distortions and weaknesses in relation to the application of the reduced VAT rate of five per cent (5%) on the supply or construction of a dwelling.
During the discussion, the Committee was informed by the Director General of the Ministry of Finance on the progress of consultations between the Ministry and the European Commission on the possibility of amending the submitted legislative proposal. During these consultations, the possibility was raised on the part of the Ministry to reintroduce the regulations in force in the national legislation in the year 2016, i.e. the framework to apply to the first two hundred (200) square meters of dwellings whose total area does not exceed two hundred and seventy-five (275) square meters. Furthermore, the issue of introducing transitional provisions for the implementation of the proposed legislation was raised, as well as the establishment of a ceiling on the market value of the dwelling.
According to the Director General of the Ministry of Finance, the European Commission pointed out that the infringement procedure against the Republic is ongoing and its final position will be formed on the law passed by the Parliament. Moreover, the European Commission is not negative to the possibility of drafting a transitional provision for the application of duration, without being excessive, while at the same time, in order to achieve the social target of the measure, the value of the property should remain within a reasonable range.
Stakeholders' representatives maintained their reservations on the draft law, pointing out, inter alia, that it should be subject to appropriate amendments which take into account updated statistical data as well as the specific circumstances of Cypriot society.
The Committee, awaiting the completion of the consultation between the Ministry and the European Commission, decided to continue the discussion of the draft laws in due course.
4. The Resolution of Credit Institutions and Investment Companies (Amendment) (No. 2) Act, 2021
(No. Fak. 23.01.062.140-2021)
The Committee began discussion of the above bill, the purpose of which is to better harmonize with Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms, following the identification of incorrect harmonization and harmonization gaps pointed out by the European Commission during the compatibility check.
During the discussion, the representative of the Ministry of Finance stated that part of the provisions of the draft law has already been incorporated into national legislation and, therefore, the Ministry of Finance will submit a revised text. Pending the submission of revised text, the Committee decided to continue the discussion at an appropriate time.
5.The Digital Security Authority Budget Act of 2022.
(File No. 23.01.063.063-2022)
The Committee began discussion of the above bill, the purpose of which is to authorize payment from the Digital Security Authority Fund in the amount of €17,152,646 for the fiscal year ending December 31, 2022.
During the discussion, the Committee was briefed by the Commissioner for Communications on the individual funds included in the said budget for the year 2022, the strategic planning of the Authority and the challenges it faces.
The Committee decided to take a position on the bill at its next meeting.
6. Releases of funds and exceptions to the prohibition on filling vacancies.
The Committee considered a number of requests for releases of funds and exceptions to the prohibition on filling vacancies.
The releases of funds relate to:
a. the Ministry of Agriculture, Rural Development and Environment,
b. the Ministry of Labour and Social Insurance,
c. the Ministry of Education, Culture, Sports and Youth,
d. the State Ministry of Research, Innovation and Digital Policy,
e. the State Ministry of Research, Innovation and Digital Policy,
e. the Secretary of State for Maritime Affairs,
f. the Ministry of Health,
g. the Tender Review Authority,
h. the Ministry of Energy, Trade and Industry,
i. the Ministry of the Interior,
j. the Ministry of Foreign Affairs.
The exceptions to the ban on filling vacancies concern:
a. the Ministry of Defence,
b. the Deputy Ministry of Research, Innovation and Digital Policy,
c. the Open University of Cyprus,
d. the municipality of Germasogeia.
Secretariat of the Parliamentary Committee on Finance and Budget Email: parliamentary-committees@parliament.cy
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