THE LAW passed on Thursday altering income tax regulations is a blessing in disguise, according to the deputy the bill, DISY’s Averof Neophytou.

The law provides that all interests and penalties owed to the Inland Revenue Department up until the end of 2008 be scrapped and replaced with a 5.0 per cent interest rate on the amount owed, provided the full amount is settled by the end of next March.

Neophytou, who said the law’s description by the media as “tax amnesty” was a misconception, stressed that it was in the public’s best interests to learn more about the law and take advantage of its provisions if applicable.

“Anyone who owes income tax up until 2008 and pays off the total amount of their debts by March 30, 2012, will only have to pay a penalty and interest of 5.0 per cent on their total debt owed, becoming exempt from any amount over that 5.0 per cent,” he said.

For example, he added, someone who owes the Inland Revenue Department €100,000 for the years 2005 until 2008 would previously have to pay a total of around €140,000 with interests and other penalties.

However: “If the specific company or person go and pay this debt by March 30, 2012, they will have to pay €105,000 and therefore pay off their debt without any further penalties”.

Reports that the new law would offer more power to tax evaders and avoiders were rejected by Neophytou. “They will be paying 100 per cent of the tax owed, plus a 5.0 per cent penalty. Not a cent will be deducted from the initial debt.”

The DISY MP pointed out that when a person or company owes the state Value Added Tax (VAT), they are made to pay a 5.0 per cent penalty for each year’s delay and a 10 per cent initial penalty.

“However, if a company or person is owed VAT returns – which is a common occurrence; hundreds of millions are currently supposed to be returned to the public – no interest or penalty is paid by the state,” Neophytou said.

By Jacqueline Agathocleous Published on November 26, 2011 Cyprus Mail