Most of the tenants of the housing and commercial real estate in Cyprus are unable to pay the same amount of rental fee during a pandemic. What to do? The proposed solutions are payments by the Government to small business owners, that suffering losses and to toughening of the tax audits and initiation a special tax for property owners.
The political parties of the Republic of Cyprus persuade the government to solve the problem and help tenants. And follow Greece actions, for example.
- The Greek Government has reduced rental fees by 40% for hiring workers and companies that were affected by coronavirus control measures. Authorities have reduced tax for all owners of houses, apartments, offices and commercial premises. The total discount is proportional to the loss that each owner incurs. The Ministry of Finances accepted a 40% reduction in the rental fees for students, who study away from home, but if their parents worked in the companies, that forced to close due to quarantine.
The Government of the Republic of Cyprus said that it does not have the right to intervenes in the relationships between owners and tenants and require to make changes in the rental agreement. Because it will be regarded as a violation of the provisions of the Constitution.
TIGHTEN UP THE TAX CHECKS
The Minister of Finance, Konstantinos Petridis believes that it is necessary to tighten up the tax audits, in order to identify the owners of housing and commercial real estate, that evade taxes.
According to experts, there are about 100 thousand properties are renting in Cyprus. A studio in Nicosia costs about 400 EUR per month, an office by the sea in Limassol – about 8000 EUR. According to the Head of the Ministry of Finance, the average rent fee is 1000 EUR per month or 12000 EUR per year, so the total income from rental properties should be about 1,2 billion EUR per year. The taxes should be paid from this amount.
One part of real estate properties have not yet been recorded in the registers as ready for use. Owners of another part of the properties have rented, but do not inform about it to authorities and do not pay taxes. It is necessary to strengthen tax audits, - said Minister.
There are a lot of problems in the real estate sector, said Konstantinos Petrides. And they must be solved as soon as possible. Accelerating those processes will help online technologies and make all bureaucratic processed into electronic form, which will be accelerated during quarantine in Cyprus.
Cypriot economist, Ioannis Telonis suggested declaring a tax amnesty for owners, who rent their properties but do not pay taxes. This must be done even despite criticism of this idea.
The problem will be resolved and the government will get several tens of millions. This is real money that so important now, and the part of taxes will be write-off that will never be able to recover.
That should help to small companies, that are owned by families, and probably it is the second part of their main expenses after paying to staff, - said the economist.
ADD A SEPARATE TAX
The Vice President of the Cypriot Association of Real Estate Appraisers, Polis Kurusidis believes that owners do not want to pay taxes. Tenants of the commercial real estate (offices and retail premises) insist on rental agreements because they need to include this expense in their audit reports.
The reason for tax evasion in residential real estate – very high taxes that accrue without taking expenses of homeowners on real estate repairs and possible credit monthly fee for the property to the bank, - said the appraiser to InBusinessNews.