Cyprus Update

Cyprus Update

The Central Bank of Cyprus (CBC) has published a third Decree with some modifications to the temporary restrictive measures on transactions.  

First, the CBC states that payments through cheques to accounts held in other credit institutions are allowed for up to €9,000.00 per month per natural person in each credit institution.  Secondly, the amount for payments to other credit institutions for transactions that fall within the normal business activity of the customer that are not subject to any restrictive measures increased from €5,000 to €25,000 per day per account.  Thirdly, there is no restriction for the payment of tuition fees of a person studying in educational institutions in Cyprus.  And finally, fixed term deposits can be terminated in order to create one or more fixed term deposits for the total amount which is equal to the initial deposit and for a term at least equal to the initial term of the terminated deposit.

Other developments in the past few days include the final draft of the Memorandum negotiated between the EU-IMF troika and the Cyprus government being agreed upon.  The Memorandum states that the €10billion loan will be disbursed quarterly starting from May 2013 until May 2016.  The memorandum also states that the Corporation Tax rate will increase from 10% to 12.5%.  The Special Contribution for Defence (SCD) on passive interest income will rise from 15% to 30%, while the rate on dividend income remains at 20%.  The term of these measures has been extended from 2016 to 2018 and the memorandum also states that the Troika will have no power over the operational aspects of the exploitation of natural gases.

Additionally, the CBC sent written instructions to the Special Administrator of the Bank of Cyprus for the unfreezing of 10% of uninsured deposits over €100,000.  The CBC has lowered the threshold of frozen deposits from 40% to 30% of uninsured deposits over €100,000.

As these events and announcements unfolded, Cyprus’ Minister of Finance resigned from office.  The new Finance Minister, Mr. Harris Georgiades, has been appointed.

Source: Fiducenter (Cyprus) Ltd newsletter

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