The draft bill proposed by the Finance Ministry as part of measures to kick-start the economy requires the fulfilment of specific criteria including five years residency in Cyprus, while the discount will only be given for 12 months. It also states that businesses do not reduce staff or dismiss other employees before hiring an unemployed individual. MPs expressed their reservations as to whether the incentive will benefit Cypriot businesses, as there are very few which have not reduced their staff in the last 10 months. They also asked for a timeframe to be set for the above criterion, while the Finance Ministry explained that the specific clause was added by Labour Minister Zeta Emilianidou as a safety measure to avoid dismissals and rehiring.

A representative of the Employers and Industrialists Federation (OEB) said that the measure was successfully implemented in Ireland with very good results. However, he joined MPs in requesting a timeframe during which employers have not dismissed staff in order not to exclude businesses from the new measure. Chairman of the Finance Committee Nicolas Papadopoulos requested additional information and explanations regarding the practical implementation of the measure in order to ensure that the incentive given to firms in not abused by exchanging current staff for the unemployed. "If these concerns are entertained and ways are found to address the risks, then the specific incentive is very important to help fight the phenomenon of unemployment in the Cypriot economy," Papadopoulos said. Akel MP Yiannos Lamaris said that the legislation is a positive step but should be simplified in order to work and be useful.

The Inland Revenue Department has expressed its disagreement regarding the duration of the 25% tax discount. A representative from the department said the people employed must not be related to the managers or owners of the business, while employers should not be allowed to make use of the measure if staff was reduced prior to the draft bill, unless the departure was voluntary or due to retirement or misconduct. It was also noted that in order to benefit from the discount the businesses must be based in government-controlled areas and not employ illegal or unregistered staff and that the labour costs subject to discount, do not include costs that have already been subsidised by the state.

Source: InCyprus