The levy, imposed on ‘uncooperative’ or ‘privileged tax’ jurisdictions and listing – among others – Bulgaria, the Former Yugoslav Republic of Macedonia, Ireland, Albania, and Cyprus, is designed to be returned to importers after they have proven that the funds withheld relate to a legitimate transaction.

But Cypriot exporters suggested it would kill trade and urged the government to raise the matter with Greece.

“What we are asking is very logical,” chairman of the chamber of commerce and industry (KEVE) Phidias Pilides said. “If there is no result then lodging a complaint to the relevant European departments must be seriously examined.”

Greece’s decision violated EU rules on the single market, he said.

The matter was discussed yesterday and exporters asked KEVE to work with the government in a bid to resolve the problem.
“This matter is extremely serious,” Pilides said. “This law must not be enforced.”

Cypriot exporters want to be fully exempted from the levy and if there is any suspicion of fake exports then it was the Greek government’s duty to investigate and act accordingly.

Pilides declined to comment on whether Cyprus should be looking at countering the decision.

Cypriot exports to Greece reached around €220 million in 2014. Services fetched an additional €250 million. Imports from Greece in 2014 reached €1.2 billion.

Exporters said the law was passed to combat transactions with countries with corporate tax up to 13%, typically used for triangular transactions where the bulk of profits are reported in the low-tax jurisdiction.

But, in the case of Cyprus, the Greeks have mistakenly lumped local companies – which are taxed 22.91% on profits – with offshore companies, which only pay a 12.5% tax.

Source: Cyprus Mail