According to Famagusta Gazette, about 20 foreign-owned banks operating in Cyprus warned that they would quit their operations on the island if the government proceeded with a new taxation of their annual turnover.
The new austerity package aiming to aid the economy of the island proposes a 0.5% tax on all businesses turnover. Foreign banks, however, are not willing to accept any alteration on the current taxation system and are threatening to move their businesses to other countries, such as Malta.
The Cypriot economy would suffer a severe blow if its offshore operating banks decided to leave the island. An International Banks Association’s official said offshore companies paid 1.2 billion euros in taxes to the Cypriot state last year, with 300,000 euros coming from foreign banks.
The new austerity measures introduced in Cyprus aim at cutting public spending but opposition parties have warned that any such measures applied on businesses would be a blast on an already slow-pacing economic growth.
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