Finance Minister Haris Georgiades - who has been largely responsible for managing the economy out of a protracted recession - has proposed to lower property taxes in a bid to boost the island’s sluggish property market.

If approved, the new bill would slash property taxes on sales and annual immovable property tax (IPT) in all categories by half, he said. IPT would be reduced to 0.05 percent under this law. This would see all sales charged at 19 percent VAT, in accordance with EU law.

The government has also proposed to remove the second tax charged by municipalities, which is over-and-above the general state IPT.

Under EU law, Cyprus is obliged to simplify and reduce the property tax situation, which is complex and difficult to understand for the average person.

And there have been many delays and even warnings of legal action by the EU against the island, said the minister.

Reduced property values

Property values and rentals have fallen by at least 20 percent in the aftermath of the financial crash in 2013, and this market is the slowest to recover because of the large amounts of money involved.

The slump in the property market has also created negative equity for most borrowers, and a dilemma for the banks with collateral now worth less than what it was when the loan was initially made.

The Brexit vote has also raised some questions about whether UK expatriates will now try to sell their properties in Cyprus at bargain prices, or hang onto them for the next two years. The UK is expected to exit the European Union by triggering Article 50, giving them two years to negotiate their exit.

There are 60,000 UK citizens based in Cyprus, who live here under EU law of free movement of people within the bloc - the largest in the world.

Surprise proposal

DISY chief Averof Neophytou has gone one step further and proposed that the property tax be completely abolished. To replace the income, the multiple state pensions for high-ranking officials should also be abolished, he told the House of Representatives.

The threat could act as some kind of incentive for the House to get moving on this legislation, to avoid EU fines that would increase the burden on taxpayers.