Cyprus close to increasing corporation tax to 12.5pc
CYPRUS is close to raising its corporation tax from 10pc to 12.5pc, bringing it up to Irish levels.
Cypriot official Christopher Pissarides added to speculation yesterday when he said the government would accept a move to 12.5pc if further increases are ruled out for a decade.
Cyprus is trying to deflect pressure from the International Monetary Fund for its bondholders and depositors to share the cost of a bailout, which it says would destabilise European markets.
The country has been shut out of international financial markets for two years. It is now seeking €17bn from the EU and IMF to recapitalise its banking sector which was heavily hit by Greek debt restructuring.
This is at odds with its contribution to the eurozone's total economic output of only 0.2pc.
Debate will likely come to a head at the European summit of heads of state in Brussels tomorrow and on Friday.
The country's corporation tax is one of the lowest in the EU and was considered non-negotiable. It was last changed when Cyprus joined the EU in 2004, and until now attempts to alter it have been rejected.
Other measures that Cyprus is being pressured to introduce include a temporary capital gains tax and the financial transactions tax being pushed through by 11 other EU countries, excluding Ireland and the UK.