The Cyprus Inland Revenue Department (IRD) announced that tax revenue during the period January -June 2008 increased by 1.7% YoY to EUR 795.2mln. The marginal improvement is primarily attributed to higher revenues associated with Special Contribution for Defense up by 18.9% YoY to EUR 204.3mln, which is mostly due to the sharp increase in deposits at banks that is subject to 10% tax on interest at source and higher dividends declared by Cyprus Stock Exchange listed companies. Local investors are subject to 15% tax suffered at source on dividend income while non-residents are tax exempt.

Revenue from Corporation Tax advanced by 8.7% YoY to EUR 118.2mln, whilst revenues from Capital Gains Tax declined by 11% YoY to EUR 192.2mln, owing to the decline in demand in the property market.