OEB warns against additional taxes on banks in Cyprus

The Federation of Employers and Industrialists (OEB) expresses concern over the renewed debate on imposing additional taxes on bank profits, beyond the existing special fee since 2011. These taxes are inaccurately described as unexpected.

During the 2011-2014 financial crisis, international investors showed trust in Cyprus by supporting the banking sector with billions of euros, despite no immediate returns. Their confidence was based on the stability of the legal and tax framework, and through cost-cutting measures and technological advancements, banks became profitable after a decade.

OEB considers it unthinkable that a sector which has stabilized and become profitable should be penalized. Such measures could deter serious investors and lead to a loss of trust in Cyprus’s economic stability. Imposing additional taxes now could set a precedent for future taxation of other sectors.

The proposed interventions may also be unconstitutional and contradict recommendations from the International Monetary Fund and the European Financial Stability Mechanism. They could negatively impact the credit rating of the sector and the overall economy.

OEB urges political forces to abandon initiatives that could harm economic stability. From 2017 to 2024, banks paid €755 million in corporate and deposit taxes, which could be used for social purposes without adverse effects.