The parliamentary finance committee should have a clear picture on the issue of reduced VAT for first residence by the beginning of March

The parliamentary finance committee should have a clear picture on the issue of reduced VAT for first residence by the beginning of March, so that a single proposal can be put before the Plenary at its first session on March 9, after the assumption of the duties of the new president of the Republic , stressed the president of the parliamentary Finance Committee, Christiana Erotokritou.

However, MPs tabled a proposal to postpone the debate pending the new finance minister, so that a new negotiation with Brussels can proceed and the regulation is based on real data, as they argued.

They noted that from 2021 to the present, the cost of owning a home has increased by 30%, and with the additional obligations for environmental provisions, the cost has increased even more. The market, they noted, is in a state of shock.

They referred to the example of Greece, where exemptions were requested for houses on islands, which Brussels adopted.

Mrs. Erotokritou pointed out that because the infringement procedure has been running from the EU since July 2021, the new finance minister should include the issue in the first issues he will consider and reiterated that "we should all be in agreement and we have come to an end".

The finance ministry spokeswoman said the Commission had given some guidelines on where the legislation should go, noting that it "should be in the context of social policy and supported by evidence".

He also emphasized that the EU informed that the transition period should be short and already a long period of time, almost two years, has passed.

The committee has before it, three recommendations. The government's bill and two law proposals of AKEL and the Environmentalists.

The Tax Department is asking for clear provisions

Tax Commissioner Sotiris Markidis stated before the committee that the transitional provisions should be clear so that the Tax department knows what it should apply.

At the same time, he referred to an "injustice" in his expression, which concerns the case where a couple buys their first home with 5% VAT and after 7 years wants to move to a bigger apartment. Then, as he mentioned, he will have to return the difference in the rate, while on the contrary if he does it in ten years, no special regulation is needed.

Ten years with 40 thousand applications for reduced VAT

In the last decade, Mr. Markidis said, 40,000 applications for reduced VAT were filed.

In the last two months of 2022, the Tax department carried out 2,200 targeted on-site audits, detecting illegalities and collecting more than €25 million, while the audits are ongoing.

The Land Development Association, the KEBE and the OEB request that the regulation be simplified, that the amount of €500,000 be set as the threshold for the application of 5% VAT and that thereafter a 19% VAT be imposed proportionally, on difference in value.

What are the MPs looking at?

The government bill provides for VAT of 5% for the first 170 sq.m. for an area of ​​220 sq.m. and a value which does not exceed 200 thousand euros.

AKEL's law proposal provides for the granting of a reduced tax rate according to the square meters of the property. However, mansions and luxury apartments should be excluded.

The Environmentalists' law proposal provides for VAT of 5% for the first 180 square meters, for houses up to 220 square meters and worth €300 thousand and for €450,000 when it comes to buying a house.

Part of the session took place behind closed doors, with Mrs. Erotokritou stating later that the goal is, through a spirit of consensus, to make the necessary amendments within the framework of European regulations and to reach a conclusion in a few weeks.

In her statements after the end of the session, DISY MP Savvia Orfanidou said that after the great reflection, there will be a conclusion from all the parties.

AKEL Member of Parliament Andreas Kavkalias described the bill as problematic, adding that the discussion, as a matter of fact, will continue with the assumption of the duties of the new government in a week. "We consider as a finance committee, it is important to have the views of the new government and the new finance minister on the matter," he said.

EDEK Member of Parliament Ilias Myrianthous stated that it is understandable that there is an ongoing infringement procedure on the part of the European Commission, "but we consider the issue to be so important that on the one hand yes it limits our time to find a solution until the end of March , but at the same time we should let the new finance minister see if there is a possibility of renegotiating the whole issue at the European Commission".

DIPA MP Alekos Tryfonidis stated that in view of the assumption of the duties of the new Government, the highest level, i.e. the Minister of Finance or even the President of the Republic, should be personally involved in the resolution of the issue and the existing conditions should be renegotiated as soon as possible. The MP of the Environmentalists Stavros Papadouris stated that the Ministry of Finance will take into account some suggestions of the parties and estimated that in two weeks the relevant legislation can be passed.

Source: stockwatch.com.cy

Photo: istockphoto.com