This week in North Cyprus > 14-21 February 2005
Vat U-turn on Pre 2005 house Purchases
Over recent weeks there has been much speculation and discussion regarding the TRNC governments proposal to increase the KDV (VAT) on new house purchases for foreign buyers. The existing rate of 5% was increased to 15% and the passed law came into effect on January 01st 2005. With permissions being granted at a very slow rate hundreds of foreign buyers would have found themselves needing to find the extra increase that they would not have budgeted for.
The announcement last week from the finance minister Ahmet Uzun clarified the fact that any foreign buyers that applied for their purchase permit before 31st December 2004 would still be liable for KDV at the old rate of 5%. Overseas purchasers applying for their permissions from 01st January 2005 will have to pay the new increased rate of 15%.
The KDV rate on new house purchases was increased to make up a shortfall in revenue after the government zero-rated many basic food items in a bid to curb the trend of visiting the larger supermarkets on the south of the island. Basic foodstuffs including bread, dairy products, flour, eggs, rice and pasta, fruit and vegetables, tea, coffee, fish, meat and poultry are now zero-rated for KDV.
The government is now looking at other ways to reclaim the expected loss of income incurred by the zero-rating of food stuffs.
Turkish Cypriot PM wins elections
The ninth general political elections since 1974 took place on Sunday 20th February, at the end of a busy and boisterous week of campaigning and rallies. Almost 150,000 Turkish Cypriots were eligible to vote but actual votes cast totalled just over 119,000. The CTP (Republican Turkish) party won 44.45% of the TRNC peoples votes. The UBP (National Unity) party were close behind with 31.71%. As with the previous result in December 2003 no one party gained the majority of seats in the 50-seat assembly so a coalition government will again be formed between the victorious CTP party and the DP (Democratic) Party. With the CTP leader Mehmet Ali Talat taking on the role of Prime Minister, the role he resigned from last year leaving both parties in the minority and forcing this years election to take place. The elected government will be sworn in 10 days from the result being announced and will serve a term of 5 years.
On most peoples, agenda were the efforts to re-unify the island; a speedy settlement could ensure that Turkey 's forthcoming talks in October would begin on the right note. However many nationalists are sceptical about the thought of the islands re-unification.
New EU regulations agreed.
The EU last week implemented new rules making it easier to take goods across the 'green line'. The opening of two new border crossings was also agreed. Regulations were amended to remove obstructions in trading fresh produce like Citrus fruits and the rules for trading animal products were simplified. Travellers across the 'green line' can now take across goods up to the value of 135 euros, one litre of spirits and 40 cigarettes.
Two new border-crossing points are to open at Bostanc i and in central Lefkosa. The new measures still fall short of the calls made by Turkish Cypriots for direct trade. After the April 2004 referendum, the EU commission prepared three by-laws to end the sanctions against the TRNC, the by-laws comprising of the newly implemented 'green line' rule but the remaining two that include the issue of 259 million euros in financial aid are still being blocked by the Greeks.
US delegations arrival in TRNC causes uproar in south.
A US business delegation flew into the TRNC for the first time last week. The trip was organised at the request of the Turkish Cypriot chamber of commerce. The associations' president Ali Erel welcomed the group of representatives from some of America 's top firms and the commercial attaché from the US embassy in Ankara .
Ali Erel said that the visit was an "important opening" for the economy in North Cyprus and proved there were no obstacles involved for US businesses looking to invest in Northern Cyprus.
The group that included firms within the Ankara based association of US companies arrived on a Cyprus Turkish Airways flight into Ercan airport, a move that infuriated the South who has been criticized for trying to stand in the way of any investment in the North.
The US ambassador Michael Klosson said America was willing to support the TRNC economy, by continuing to work towards the international isolation of North Cyprus and improving the 'green line' regulations.
Direct flights to Ercan?
There have been reports that when Britain takes over the EU presidency from Luxembourg in July, they will seriously consider making direct flights to the TRNC. The UK will also try to initiate a new plan for a settlement in Cyprus and to end the sanctions against the TRNC, after the Greek Cypriots voted overwhelmingly against the Annan plan in last Aprils referendum.
If direct flights are authorised the move will be seen as symbolic, but Britain will have to take care not to violate international laws. The Civil Aviation Organisation does not recognise Ercan airport, however charter flights are not subject to communications with national official aviation authorities.
Resources: Cyprus Today
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