The announcement was made by Finance Minister Harris Georgiades after a cabinet meeting.

The minister said the cabinet decided to cut the rate to 0.05% across the board from the 0.1% initially proposed last year.

The flat rate will be levied on property values updated in 2013. To date, IPT is calculated on 1980s values, excluding many properties because they did not exist at the time. Rates differ depending on the value.

The revenues from IPT will be used to fund local authorities which stand to lose considerable income by the decision to scrap their IPT.

The government was hoping to pass the bill in 2014 but disagreements among parties caused delays.

“Today we have taken one more step in tax reform and easing the tax burden of households and businesses,” Georgiades said.

The 20% discount afforded to those who pay their IPT early will be maintained, the minister said. Exempted from paying are the small owners with an IPT of up to €25. This exempts 19% of the owners, the minister said.

The cabinet also decided to permanently cut transfer fees on all building land transactions by 50%.

The reduction was introduced as a temporary measure until the end of this year in a bid to encourage people to apply for their title deeds.

At the same time however, the government plans to impose 19% VAT on land sales as part of commercial property transactions. Georgiades said it was matter of compliance with EU directives.

This will fetch the state some €24m as opposed to around €58m in lost revenues from the reduction in the tax rate –down to €45m from €103m.

“I want to clarify that VAT on building land transactions does not concern transactions carried out by individuals, unless it is clearly part of a commercial activity,” the minister said.

Source: Cyprus Mail