TAX EVASION CRACKDOWN
GOVT TO CLAMP DOWN ON ‘THOUSANDS OF ILLEGAL FOREIGN PROPERTY RENTALS’
THE government is working on a “comprehensive plan” to crack down on tax avoidance by expat landlords said to be costing the state millions of TL in lost revenue. The scheme will also make it compulsory for visitors coming to stay in privately rented properties to have travel insurance.
Tourism and Environment Minister Fikri Ataoğlu told Cyprus Today: “We are working with the Finance Ministry on a project to clamp down on thousands of illegal foreign property owners who are renting out their villas and apartments to tourists without declaring this for tax purposes, causing a major loss to the state to the tune of millions of TL.
“In İskele alone, there one site of 250 units that are rented but not declared. Then there are thousands in Gazimağusa and all the way to the Karpaz, plus more in the Girne area.”
Mr Ataoğlu said details of the project were still being worked out, and would be announced “in due course”, but confirmed that one line of approach would be obligatory travel insurance.
“Up to now, only tourists coming with an agent are insured. This is a major problem for the TRNC. What about individual tourists who rent a property privately and aren’t even known to be staying there?
“We have reached the conclusion that the best way is to tackle both issues, so will be introducing a comprehensive project.”
Mr Ataoğlu added that practicalities were still being worked out with the Finance Ministry.
Cyprus Turkish Travel Agents’
Union chairman Erkan Kilim welcomed the move to stamp out illegal private holiday rentals, which he said were “unfair competition for tourism establishments which are paying their taxes”, but “completely disagreed” with compulsory holiday insurance. “In no other country on the planet is there a rule that makes it compulsory for tourists to take out insurance,” he said.
“Tourists come from the UK and Europe are very well versed and informed and generally take out insurance anyway. You can’t force any others, whether they stay in hotels or rent privately, to take out insurance cover. How would such a system work?”
Cyprus Today reported six years ago a Finance Ministry call for expat home owners to cough up an estimated £1.3 million in undeclared rental taxes, after it was estimated that nearly 1,000 properties had been rented out between 2009 and 2011 without 10 per cent tax being paid on income of £13 million.
In 2011, then finance minister Ersin Tatar said investigations had revealed 90 per cent of rented properties were being dealt “off the books” in the Girne area alone.