As things stand today, there are about ten different taxations/fees/levies regarding immovable property, paid to different authorities on different dates. The question begging for an answer is if an owner can find a way out of this bureaucracy web, to which we answer, ‘’NO’’.
The restructuring and simplification of what is now in place is possible if we aim for a modern tax system based on certain principles.
The system must be simple, easy to understand and fair. How do we achieve this? It can be done by replacing the heap of taxes with just three, covering:
One tax when acquiring a property: You now have to pay either VAT of transfer fees
One while holding the property paid annually: What applies today is sewage fees, municipal property tax and various other municipal fees
One when selling a property: Payment of capital gains tax or income tax/company tax
On top of all of the above income tax/property tax and a defense levy apply to income generated from an immovable property i.e. rents.
We have to stress the fact that many of the above fees are nothing less than taxation in disguise.
If you study the transfer fees paid by owners for example the cost has no direct relation to the level of services offered by the Lands & Surveys Dept. The cost should be in the region of hundreds of Euros and not thousands, as is now.
It is widely accepted that fees paid should reflect the level of offered services and nothing more.
It is also important that all procedures are transparent and fair to avoid scandals, an everyday occurrence these days.
Another issue concerns the cost imposed for public-interest projects, i.e. who pays for them and how.
To be clearer on the issue, we must state that there are no fair rules in place right now. Some projects, like the sewage fees are charged to the owner, depending on the value of his property. On the contrary projects like building a motorway are charged to all taxpayers.
If the sewage logic would apply to constructing a highway, then all users would contribute by paying a highway toll related to the value of their car and not the type of the car i.e. saloon, bus, lorry etc. which is non-sensical.
Simplifying property taxes/fees should be primarily governed by a decision to pay all taxes to a single authority. Payment should be spread throughout the year and be payable on the internet frequently. This is a procedure followed for many years now when paying for car road tax.
Many owners also ask for the opportunity to be informed of any taxes or levies through the internet. A statement for each tax payer with all taxes should be created by Expanding the Lands & Surveys current system to achieve this.
The logical conclusion is that simplification is possible through careful planning and the willpower to succeed.
#tax #immovableProperty #taxation #owners #sellers #properyTaxation #CyprusTaxation
Chairman Cyprus Association of Property Owners (ΚΣΙΑ)
Honourary President Cyprus Association of Property Owners (ΚΣΙΑ)