Officials acknowledge teething problems with new tax system

Officials on Monday conceded certain problems have arisen with the new tax system instituted at the start of this year, but also said some of the issues have to do with lack of awareness on the part of the public.

Tax Commissioner Sotiris Markidis was briefing MPs on how the new tax system is progressing, almost a month after it kicked in.

The website of the tax department has posted a guide and an FAQ to help people better understand what tax exemptions and deductions they’re entitled to, based on household income and family status.

Meanwhile the Chamber of Commerce and the Employers and Industrialists Federation have been holding workshops offering tax guidance to people and businesses alike.

To date, approximately 10,000 people have attended the seminars.

Markidis confirmed that January will be the first month in which wages will be impacted by the new tax regime.

All taxpayers, he said, should see a rise in their net salary after the increase in the tax-free threshold.

Effective January 1, the personal income tax-free threshold went up from €19,500 to €22,000.

One of the issues spotted concerns the T59 form. Individuals (not corporates) file the form to apply for tax discounts.

Markidis said some people are having difficulty filling out the form as they’re unsure what discounts they’re entitled to.

They need to become informed, next calculate the discounts themselves, and ask their employer to make the necessary deductions from their salary.

At any rate, the T59 form does not need be filled out now – it can be done later – so it won’t affect the tax returns.

There’s also some confusion as to how household income should be calculated in terms of what tax rebates apply. There are cases where children earning an income still live in their parents’ home.

The tax relief covers discounts on personal income tax, rent, purchase of electric rates, and installation of solar panels.

Answering queries, Markidis clarified that interest rate discounts on home loans concern the purchase and construction of houses – but do not extend to renovations.

Including renovations would require amending the law. MPs agreed.