The Parliamentary Trade Committee is advocating for the abolition of the €350 company fee, a topic that will be discussed again today (13.06) in order to reach a decision before the summer recess of the Parliament.

Although the State collects approximately €70 million annually from this tax, Members of Parliament argue that it should be abolished because it was imposed during the memorandum era and they believe there is no longer a valid reason for its continuation. This sentiment is particularly strong considering the State's decision to refund subsidies and eliminate other deductions in the public sector, which were also part of the memorandum agreements.

However, the Ministry of Finance does not share the same view. According to a reliable source speaking to Brief, the Ministry does not support the company fee abolition or modification, as it would lead to significant losses in public finances and negatively impact fiscal planning. When asked about the possibility of incorporating this measure into the tax reform, the source mentioned that it is being considered as part of the simplification of the tax system.

According to the Director of the Companies' Registry, Irene Mylona-Chrysostomou, approximately 177,000 companies were registered in Cyprus in 2022. Out of these companies, around €42 million was collected for the year 2022, while there are still outstanding payments of €30-32 million as many companies have not settled this particular fee.

Regarding the consequences for companies failing to pay the tax, when asked, Ms. Mylona-Chrysostomou explained that since 2011, when this provision was incorporated into the Companies Law, the Companies' Registry proceeds with the removal of non-compliant companies. However, the Companies' Registry cannot proceed with the removal of companies due to the processes that are involved, allowing for objections from other authorities and companies, such as the Income Tax Authority and banks.

Ms. Mylona-Chrysostomou provided data from previous years, where the Companies' Registry sent a number of warning letters to companies, indicating the possibility of their removal. However, these removals did not take place due to the prescribed procedures.

According to the legislation, in order to remove a company, it must first be published in the Government Gazette, providing a three-month warning period. During these three months, the intention to remove the company remains open for objections from anyone who wishes to challenge its removal. These objections are communicated to the Companies' Registry and are either accepted or rejected.

For instance, in 2015, the Companies' Registry published 93,000 warnings to companies, and ultimately, 55,000 companies were removed. In 2017, the percentage was even lower, with 81,000 warnings published and only 10,000 companies removed due to objections.

In late May, the Parliamentary Committee on Energy, Commerce, and Industry was working on legislation to abolish or phase out the €350 fee on companies before the summer recess. Chairman Kyriakos Hadjiyiannis argued that the fee, a result of strict fiscal measures during the memorandum period, burdens businesses without benefiting productivity. AKEL MP Kostas Kostas criticized the previous government for not proposing the fee's abolition, while Michalis Giakoumi, a DIPA member, and Stavros Papadouris, a Green Party member, supported complete elimination.