The government has submitted to parliament a draft bill indirectly exempting from payment of 19 per cent VAT young couples who buy land for the purpose of building a primary residence.

The issue is related to the passage of a law last November imposing 19 per cent VAT on building land.

In its wake, persons buying a finished housing unit or apartment as their primary dwelling must pay 5 per cent VAT, whereas purchasing a plot of land for owner-occupied housing incurs a 19 per cent VAT charge.

Now, the new bill provides that, whereas newlyweds buying land for owner-occupied housing will pay the full tax rate, 14 per cent of the VAT imposed on the value of the land would be returned to them in the form of a grant, so that ultimately they pay only 5 per cent VAT.

Lawmakers meanwhile have tabled a legislative proposal aiming to eliminate a distortion where certain buyers of real estate must pay property transfer fees while others do not.

The bill was tabled by Disy MP Averof Neophytou.

When a person buys a new property and pays VAT on it, he or she is not subject to transfer fees, whereas transfer fees do apply when the transaction involves a land lease.

To end the distortion in the market, the proposal provides for the non-payment of transfer fees for rentals or leases of immovable property when the persons involved already pay VAT on taxable business activity.

But not all MPs are on board with the proposal, which was discussed during a closed-doors session of the House finance committee.

The Greens’ George Perdikis said his party would never consent to an arrangement letting developers “off the hook.”

Whereas the lease option might benefit entrepreneurship – by eliminating transfer fees – this should not be done at the expense of state revenues, he said.

“There is a large discussion going on about leases in which the church is involved, and we shall under no circumstances agree to the state taking a hit in order to serve the interests of a businessman, whoever he or she may be.”

After the VAT on building land was passed late last year, parliament brought regulations specifying which type of development would be subject to the tax.

Protected zones and farming land were exempted.

Source: CyprusMail

The privatisation process for the Cyprus Cooperative Bank has been postponed for mid-May.

Under the initial timeframe, binding offers should have been submitted next Monday.

The delay was approved by the European Central Bank and the SSM which supervises the Cypriot systemic banks, among which the CCB. The SSM will be called on to approve the transaction.

Saddled with non-performing exposures (NPEs) amounting to €6.2 billion roughly 60% of its total loans and facing mounting capital needs due to new assumptions concerning the valuation of collateral connected with the its NPEs, the CCB launched a bidding process offering prospective investors with two options. Either to acquire the whole banking entity through a capital raise or to acquire performing part of the bank, that is, performing loans, deposits and part of its banking network.

So far, only Hellenic Bank confirmed its interest for the CCB.

Source: Stockwatch

Cyprus comprises a safe, liable and competitive destination for startups and tech companies aiming for a global outreach, and is fully implementing relevant European legislation, Demetra Kalogirou, the Chairwoman of the Cyprus Securities and Exchange Commission (CySEC) said on Tuesday.
 
Kalogirou was addressing tthe two-day conference “Cyprus IT Forum 2018”, in the southern coastal city of Limassol, upon the initiative of Russian citizens working in Cyprus.
 
In her statements, the CySEC Chairwoman said she had the chance to brief participants about the Commission’s monitoring role and inform them on technology and startups- related legislation and regulations.
 
Cyprus can become the base for companies looking to avoid high costs, while working in line with European Directives and protect investors, she said and expressed optimism with regard to the sector’s prospects.
 
The conference will be also addressed by the Permanent Secretary of the Energy Ministry, the Commissioner of Electronic Communications and Postal Regulation, the President of the National Betting Authority and Invest Cyprus representatives.

Source: Stockwatch

A new application, Taxify, which is being launched on Wednesday in Nicosia is expected to revolutionise the taxi sector in Cyprus.

The app allows users to set their location and see where the nearest partner taxi is and order it. The taxi can be tracked heading to the customer’s location and indicates how long far away it is and how long it will take to arrive.

Customers can also track their routes while inside the cab, preventing drivers from taking longer routes and overcharging for trips. Customers will also be able to pay via their phones.

Taxify, which is being used in Europe already will start operating in the capital, with an expansion of services to the whole island planned in the near future.

According to the Cyprus News Agency, the application was created in Estonia and has been a great success in Europe, Central America and Africa. With 5 million users in 30 countries and with transactions over $ 1 billion, it is today the most rapidly growing technology company in Europe.

Sotiris Tigarides, head of the service in Cyprus, said the company will use only registered taxis with professional taxi drivers who are mostly self-employed and will be able to continue to work with both existing taxi offices and Taxify.

Customer safety and the legal aspects of the industry will be a priority, he said.

The app will offer different payment methods and has a ratings utility. It is available for Android, iOS and Windows phones.

Drivers are charged a commission of only 15 per cent, while other, similar applications charge 25 to 30 per cent, he explained.

Source: CyprusMail

Fitch Ratings has upgraded Cyprus`s Long-Term Foreign-Currency Issuer Default Rating (IDR) to `BB+` from `BB` with a positive outlook. The rating is just one step before the investment scale.

Fitch said that future developments that may, individually or collectively, lead to an upgrade include the reduction in banking sector NPEs that materially reduces the sovereign`s contingent liabilities,  track record of declining GGGD/GDP ratio and continued deleveraging of the private sector.

It notes that it does not currently anticipate developments with a high likelihood of leading to a downgrade. However, it says that future developments that may individually or collectively lead to negative rating action include failure to improve asset quality in the banking sector and deterioration of budget balances or further materialization of contingent liabilities that results in the stalling of the decline in the government debt-to-GDP ratio.

In its key assumptions, it notes that gross government debt-reducing operations such as future privatisations are not considered in Fitch`s baseline scenario. The projections also do not include the impact of potential future gas reserves off the southern shores of Cyprus, the benefits from which are several years into the future.

Fitch says that it does not expect substantial progress with reunification talks between the Greek and Turkish Cypriots over the next quarters, noting that `the reunification would bring economic benefits to both sides in the long term but would entail short-term costs and uncertainties`. 

It says that Cyprus`s external financing flexibility has improved substantially since the country exited the macroeconomic adjustment programme in March 2016.

"The government tapped international markets in June 2017 and external interest payments are set to decrease to 6.6% of current account receipts in 2018-2019, down from an average 16.2% in 2011-2012. Cyprus is also attracting large foreign direct investments in the construction, tourism, energy and education sectors. Cash reserves were EUR1.2 billion at end-2017 covering expected gross financing needs for 2018".

Recently published data from the Central Bank of Cyprus (CBC) indicate that external sector statistics are materially distorted by special purpose entities (SPEs), including shipping and financial companies.

"`We expect the large import-content of investments will keep weighing on the current account deficit, which we project at about 6% of GDP in 2018-2019, compared with a `BB` median of 3.2%, but it would be significantly lower when excluding SPEs, as per the CBC`s estimates. Similarly, net external debt (NXD) excluding SPEs would turn into a small net asset position of less than 3% of GDP in 3Q17 according to the CBC, compared with a non-adjusted NXD of 164% of GDP at-end 2017 and a `BB` median of 13%".

Fitch says that Cyprus`s fiscal performance has benefited from a very strong cyclical economic recovery, and prudent fiscal policy.

"We forecast the government will continue recording fiscal surpluses of 1.1% of GDP in 2018 and 2019, after over-achieving its fiscal target in 2017 with an estimated surplus of 1.9% of GDP, compared with a `BB` median fiscal deficit of 3.2%. A dynamic labour market and sustained economic momentum will support revenues while the recent agreement with trade unions limiting the payroll rise to nominal GDP growth and the hiring freeze adopted in the public sector will help contain current spending". 

As far as medium-term debt dynamics is concerned, they point towards a firm downward trend, which will provide Cyprus with some fiscal room to absorb any materialisation of contingent liabilities arising from the banking sector, Fitch says, adding that strong nominal GDP growth, at a forecast 4% over the medium term, ongoing expected primary surpluses and a very gradual increase in nominal effective interest rates will lead to a decline in the gross general government debt (GGGD)/GDP ratio to less than 90% by 2022. 

"We expect real GDP growth to remain robust in the coming years and average 3.4% in 2018-19, supported by a dynamic tourism sector and buoyant construction activity. Private sector debt and non-performing exposures (NPEs) remain high and are still weighing on new lending, but we believe economic growth would be resilient to a possible acceleration in NPEs normalisation. The recovery relies largely on foreign-financed investments, which should minimise any contraction in domestic demand. Households` deposits are also substantial at 123% of GDP at end-2017, twice the stock of households` housing loans, and strong employment growth and rising wages would help smooth private consumption if debt service costs were to increase". 

Furthermore it says that deleveraging of the private sector is ongoing, with households` and corporate debt (excluding non-financial SPEs) declining by 5pp in 3Q17 to 250% of GDP adding that increased earnings, ongoing resolution of mortgage arrears, recovering house prices and upcoming legislative reforms enhancing the foreclosure and insolvency framework might foster further debt repayment.

According to Fitch, Cyprus`s `BB+` IDRs also reflect the following key rating drivers mainly that the weakness of the banking sector remains a risk to public finances and weighs on Cyprus`s credit profile.

"The government deposited EUR2.5 billion in Cyprus Cooperative Bank (CCB) in April 2018 to alleviate depositors` concerns ahead of the expected sale of the state`s majority stake in the bank and following a recent outflow of deposits from CCB. We expect this to lead to an increase in the GGGD/GDP ratio to 104% of GDP in 2018, from 97.5% in 2017".

In addition, it says that the Cypriot authorities intend to launch a new "Estia" scheme which would apply to the banks` problem housing loans to vulnerable groups, currently estimated at EUR3 billion.

"The scheme will rely on loan restructurings and state subsidies to incentivise borrowers` repayment and would imply an estimated yearly fiscal cost of 0.25% of GDP over the medium term".

Noting that the ratio of NPEs to total loans declined gradually to 42.5% at end-2017 (109% of GDP), down from 46.4% at end-2016, it adds that the decline stems from rising repayments, debt restructuring, loan write-offs and large recourse to debt-to-asset swaps.

However, Fitch says, developments were uneven across banks, as the country`s two largest domestically-oriented banks, Bank of Cyprus (BoC) and Hellenic Bank (HB) progressed faster than its cooperative sector, where NPEs were 59% of total loans at end-September 2017. 

Regarding capitalisation, it notes that it remains above regulatory requirements but decreased in 2017, with common equity Tier 1 declining by 1pp to 14.9% as banks increased their provisioning and recorded some losses.

"Unreserved NPEs for the sector amounted to EUR11 billion (57% of GDP) at end-2017, which could lead to some capital shortfall if losses were to crystallise and higher than expected haircuts were incurred when liquidating underlying collateral. This level of NPEs is very significant relative to the overall banking sector common equity Tier 1 capital of EUR5.4 billion at end-2017".

As far as liquidity it concerned, Fitch says it has improved as denoted by the repayment of ECB emergency liquidity assistance balance in 2017 and deposits increased by 3.1% y-o-y to EUR49.4 billion in December 2017.

"However, non-resident deposits still represent a quarter of total deposits at BoC and a half at HB. These are largely short-term funding and confidence-sensitive and would likely become more volatile than domestic deposits in case of stress," Fitch concludes.

Source: Stockwatch

NEWS

Bitcoin (BTC) is on the cusp of $9,000, and Ethereum (ETH) is over $630, as the crypto markets continue to climb upwards today, April 22, according to data from Coin360.

BTC is currently trading at around $8,977, having broken $9,000 earlier today, up almost 2 percent over a 24 hour period to press time. According to CoinMarketCap, BTC dominance is around 38.4 percent, down from a monthly high around 44 percent.

ETH is up over 5 percent over a 24 hour period, trading at around $637 at press time, a level it last hit on March 14.

Of the top ten coins on CoinMarketCap – which are all in the green today – Bitcoin Cash (BCH) and IOTA are up the most, up 9 and 10 percent on the day, respectively. BCH is trading for around $1,240, and IOTA around $2.08 at press time.

The total market capitalization of all cryptocurrencies is nearing $400 bln, currently around $397 bln as of press time. The last time total market cap reached this price point was in early March.

This weekend has seen some potentially good news for crypto regulation. In India, a crypto company has filed a claim against the Reserve Bank of India(RBI) for their earlier decision to end dealings with crypto-related entities, claiming the ban is unconstitutional. RBI has until May 24 to respond to a notice, then reportedly issued by the High Court of Delhi.

Source: Cointelegraph

Three investors are interested in the co-op bank, as the procedure to dispose of the state-controlled lender enters its final stretch, it was reported on Friday.

According to the Cyprus News Agency, by Monday April 23 the co-op bank is expected to wrap up presentations to prospective investors and any binding offers will be submitted by Monday, April 30.

Bank officials did not, however, rule out further consultations next week.

On March 19 the Cooperative Central Bank launched a tender for expression of interest offering two options – acquiring a controlling stake in the bank’s share capital, currently owned by the state, or acquiring assets and liabilities.

Two of the three potential investors are examining both options, the agency said, while the third is exclusively interested in the second.

Only Hellenic Bank has officially confirmed it is participating in the procedure. Any proposal would have to be approved by the EU’s Single Supervisory Mechanism, which oversees the co-op bank.

The state nationalised the co-op banks in 2013 through a €1.7 billion injection. Earlier this month it was forced to deposit €2.5bn in a bid to boost confidence amid rumours that sparked a run on the lender.

Source: CyprusMail

Discover the top ten most expensive penthouses in the world. Can we be there someday?

TOP 10 EXPENSIVE PENTHOUSES

#10 - Old Trees Penthouse - $8 Million

#9 - Quintessential’s Penthouse - $10.9 Million

#8 - Saint Petersburg’s Penthouse - $15 Million

#7 - Spencer Condominium - $29.5 Million

#6 - Sydney Harbor Front Penthouse - $30 Million

#5 - One 57 Penthouse - $90 Million

#4 - City Spire Penthouse - $100 Million

#3 - Pierre Hotel Penthouse - $125 Million

#2 - Hyde Park Penthouse - $200 Million

#1 - Monaco’s Tour Odeon Penthouse - $387 Million

The European Central Bank (ECB) seems to favour merging the performing operations of the Cyprus Cooperative Bank (CCB) with another Cypriot lender, Finance Minister Harris Georgiades said on Thursday.

He was responding to questions by MPs during a joint meeting of the House finance and watchdog committees on the future of the troubled Co-ops.

Responding to a question, Georgiades said that Frankfurt seems to be in support of merging of the ‘good’ part of CCB with another Cypriot bank.

In fact, he said, he does not rule out the possibility of the EU Single Supervisory Mechanism (SSM) pre-approving that plan over a proposal for the sale of the entire banking entity.

“I would not rule out, even if there are various proposals at the table, the preapproval by the supervisory entity of that choice, which would include merging with another bank,” Georgiades said.

He said the procedure to seek an investor for the CCB was according to the demand of the ECB to explore all options. Their final view would be made clear after the completion of the procedure. “I would even say that they will decide to a large extent who will be the preferred tender, and by their choice, the preference will probably arise”.

The head of the Central Bank of Cyprus (CBC)’s supervision department, Yiangos Demetriou, told MPs that given the high capital requirements, the choice of a private investor to participate in the CCB capital is not on the table.

On the withdrawals of deposits from Co-op banks – following rumours prior to the presidential election of a possible new ‘haircut’ this time at the CCB – Georgiades said that they had peaked in two phases; between December 2017 and January 2018, but also at the end of March, forcing the state to deposit €2.5bn to stabilise the situation.

“I am under the impression that the deposits did not leave Cyprus, but they did not even go to banks,” he said.

CEO of the CCB, Nicholas Hadjiyiannis, said that outflows of deposits from the beginning of the year reached € 1.9bn, with the largest daily outflows being observed in the last days of March. Outflows in March, he said, amounted to €700m.

“Those days were a nightmare,” he said.

Under pressure from the SSM to raise provisions against bad loans depleting its capital, the CCB launched on March 19 a privatisation process offering potential investors two options, either acquiring the whole banking entity or acquiring its performing operations and a part of its banking network or its non-performing loans amounting to €6.2 billion or 60 per cent of its total loan book.

Cyprus bailed out the CCB in 2014 injecting €1.5bn using loans it received from the EU and the IMF as part of the €10 billion financial assistance programme. In 2015 the government injected an additional €0.17bn to boost the CCB’s capital.

Source: CyprusMail