World Tax Update :: EUROPE, MIDDLE EAST, & AFRICA

EUROPEAN NATION CYPRUS CONSIDERING TAX INCREASES AS PART OF BAILOUT NEGOTIATIONS

Negotiations for a potential financial bailout of European nation Cyprus may include consideration of a potential increase in the country’s corporate tax rate of up to three percent, which could raise up to EUR 180 million per year.

In addition, consideration is being given to a financial transaction tax and a temporary capital gains tax. The capital gains tax rate would be 0.1% for stock and bond trades and 0.01% on derivative trades. Cyprus has been a hot topic lately as the country faces allegations of facilitating money laundering and is seeking a financial bailout loan of up to EURO 17 billion in exchange for the tax increases. Ireland faced similar demands for tax increases as it secured a bailout in 2010, but was able to maintain its corporate tax rate at 12.5%.