Cyprus - Lessons learnt from Covid-19 pandemic

Country Correspondent: Athina Stephanou

 Benefits for the Tax Department:

  -  It might have fast-tracked online services for taxpayers.

 -  Introduced webinars and online meetings as a norm.

 -  It showed us that tax work can be done without the physical presence of the     taxpayer or his representative.

 -  It showed the taxpayers that it is not necessary to visit the tax offices in order to settle their tax affairs.

 -  Some businesses had higher revenues, other expanded their businesses.

-   Businesses and individuals became more familiar with IT systems.

Losses for the Tax Department:

 -  Less revenues as many businesses had reduced revenues.

-   A percentage of businesses went or will go bankrupt.

   -  Some of its targets needed to be postponed i.e. tax audits, enforced collection measures etc., considering the hardship on certain businesses.

 -  In addition, there was a postponement of tax payments and submission

of tax returns for tax years relating to 2019 and 2020.

-   The department had to incorporate in its business assistance to Ministries e.g., payment of subsidies to certain businesses, decided by the Ministry of Finance,

on its behalf, etc.

  -   Deviation from targets with temporary support measures through tax laws e.g., tax credit for rent reduction to businesses that postponed their business subject to conditions, etc.

  Generally, the pandemic caused a big deficit in the government budget that may lead to the revisit of the tax system and tax rates. It is not clear what the long-term effect will be in all aspects.

 Lessons learnt:

-  We need to be flexible and proactive

-  We need to react early enough to recovery measures

-  We need to be fair, prompt and correct when deciding the recovery measures

-  Tax compliance culture within the society is very important

-  Global and domestic cooperation will give better results

-  We need to be innovative

-  Business continuity under any circumstances is very important, therefore tax business must be able to be done from distance

 -  More must be done for prevention rather than enforcement

 -  Perhaps there is a need to review the working environment and working   agreements to satisfy any possible needs identified. This may lead to better production results

Conclusion

-  I think countries with tax compliance culture will recover much quicker. Promotion of professionalism (attitudes per organization values) within the tax department is a catalyst for promoting tax compliance culture within society.