The Plenary Session of the Parliament voted by a majority the relevant law with 26 votes in favor and 22 against.
Under the current legal framework in the event of a transfer of works, assets or liabilities from one credit institution to another in the context of a reorganization, the accumulated losses of the reorganized credit institution create a deferred tax asset in favor of the acquiring credit institution tax credit.
The Bank of Cyprus had recognized in its financial statements for 2019 a deferred tax claim of € 417 million.
With the law passed, the acquiring credit institution that benefits from the special tax credits will pay as a consideration to the state annual guarantee fee, which is set at 1.5% of the product of the tax rate with the relevant annual installment on the relevant accumulated losses.
The Minister of Finance will also be able to set a higher guarantee fee, in order to ensure the collection of the guarantee fees corresponding to a credit institution from the date on which the relevant regulation came into force.
The President of EDEK Marinos Sizopoulos expressed his disagreement with the philosophy that governs the law regarding the management of credit institutions and said that they will vote against the law, while noting that when the relevant law was passed in 2019, the banking organization was awaiting its vote to announce results.
DIPA-Cooperation MP Alekos Tryfonidis said that based on the law passed in 2019, the credit institution has already benefited from the deferred tax, without paying a fee to the state. Today, he added, we will vote on the obligation of the credit institution to start paying to the state a guarantee fee that has benefited from the legislation of 2019. The Bank of Cyprus, he said, has gained a strong tax advantage and must pay a fee to the state reflecting this benefit. The state, he added, is expected to receive 59 million euros as a guarantee fee by 2028 and said that for this reason DIPA will vote.
ELAM MP Linos Papagiannis stated that they would not vote for the law after they had voted against it in March 2019 together with EDEK, while the official opposition had abstained.
DIKO MP Christiana Erotokritou said that with this law from now on the credit institution will pay money to the Republic for the amount it has benefited and for this DIKO will vote in favor.
AKEL MP Aristos Damianou said that during the passage of the law in 2019, AKEL abstained because the appropriate procedure was not followed. He added that they would now vote against, underlining their position of authority, as a particular credit institution had received a benefit of more than € 400m from the CSD. amount. He also said that the passage of this regulation will allow the bank to enjoy this benefit. “I too would agree to benefit from € 400 million and pay $ 59 million in the long run,” he said, adding that the law is a golden pill to continue this practice.
DISY MP Onoufrios Koullas said that this Parliament did not vote to give € 400 million to a credit institution, but to relieve a recipient bank that was burdened with liabilities of another bank that closed. These decisions, he said, were taken at European level so that the recipient bank would have a tax advantage so that it would not collapse. Now he said, it is time to receive the compensation for what we have already given.
AKEL MP George Loukaidis said that this is a write-off of a multimillion-dollar bank liability, and because There was not even the approval of the EU, the relevant law in 2019 was passed with a proposal for a Member of Parliament.
Ms. Erotokritou noted that no debt of € 417 million is written off by this legislation, something to which Mr. Koullas agreed, stating that there is no write-off of the tax credit and the possibility is given for a significant increase in state revenues.