The members of the Parliament’s Economic Committee will seek answers from technocrats in order to make a final decision on the issue of the proposed reduced VAT of 5% on the purchase or construction of a residence. As stated by the Members after a closed-door session of the Committee, the next session will call upon the Tax Commissioner, ETEK and the Director of the Department of Town Planning to express their views and provide answers to the Members’ questions.

Most MPs do not accept the revised bill, which suggests a 5% VAT on the initial 170 sq.m. of the residences’ construction area, given that the total area is up to 220 sq.m. and the transaction value is less than €385,000. As for the apartments, the bill proposes a 5% VAT on the first 90 sq.m. of the construction area, given that the total area is up to 110 sq.m. and the total transaction value is less than €220,000.

DISY submitted an amendment to the bill, according to which the 5% VAT can be solely granted based on the property value and not on the square meters.

After the session was concluded, the chairman of the Committee and DIKO MP, Chrysis Pantelidis, disclosed his certainty that the Committee’s work is in its final stages, since the government has already presented its final views and therefore the political parties have got the full picture. He expressed his hope that the issue will be brought before the plenary as soon as possible.

Mr. Pantelidis noted that there is eagerness for cooperation among all sides. He reiterated the position of DIKO that there should be a regulation that on the one hand protects both the people who want to purchase a house and the construction industry of the country and on the other hand is compatible with the spirit of the EU VAT directive.

DISY MP, Savia Orfanidou, referred to her party’s bill amendment, as a reminder that DISY objects to the government’s proposal. As she said, "we cannot impose distortions that will ultimately create problems in the market and, on the other hand, will affect young couples."

She added that DISY’s amendment removes the distinction based on square meters, as well as among apartments and detached houses. “The only criteria should be the property value and the progressive taxation that includes a maximum limit”, she clarified.

Andreas Kafkalias, AKEL MP, stated that the Committee’s attempt is to formulate a proper and fair law that will regulate the granting of the reduced tax rate of 5%. He added that the government bill has been approved by the European Commission, however, it leaves society unprotected, as it sets a maximum value limit of €220,000 for purchasing an apartment, which leaves out a large number of middle class citizens. According to Mr. Kafkalias, this showcases the absence of an integrated housing policy.

AKEL MP referred to the fact that there was no substantial change in the government bill, when it was presented in the Committee’s last session. He said that he asked for the Tax Commissioner, the President of ETAK and the Director of the Town Planning Department to attend the next session, in order for the MPs to get more specialized assessments on the issue.

The President of EDEK, Marinos Sizopoulos expressed the view that the only sustainable regulation would be to introduce the 5% VAT, based entirely on the property area and not its value. Mr. Sizopoulos explained that If the final bill includes the property value, this will spark serious social inequalities, which will have an enormous impact on Cyprus’ families income and national economy.

DIPA MP, Alekos Tryfonidis, explained that after the government's submission of the revised bill, which is based on property values and square meters, the fruitful discussion will continue next week. Mr. Tryfonidis points out that the presence of the ETEK, the Director of the Department of Town Planning and the Tax Commissioner, will assist MPs with the experts answering their critical questions related to the procedures. He also declared his intention to submit amendments regarding the issue of property values.

Greens MP, Stavros Papadouris, affirmed that his party's goal is to come up with a simplified, clear, and fair formula. He added that a “fair formula” means changing the legislation and adding an optional transitional period for those who are already in the process of purchasing property, so that they will not be charged with additional costs. He expressed the view that the transitional period should be given as an option to those who have already applied for a building permit.