**Nicosia, Cyprus** – A significant property transaction orchestrated by an unnamed, but reportedly "well-known businessman" in Cyprus has come under intense scrutiny from the island's Audit Office, which is questioning the legitimacy of a substantial price reduction and the Tax Department's apparent inaction. The report, released earlier this week, highlights a dramatic ¥8.5 million decrease in the sale price of a property within a six-month period, raising concerns about potential tax evasion and the erosion of government revenue.
The property in question was initially slated for sale in December 2015 under an agreement valued at €19.35 million. However, this arrangement was subsequently rescinded, and a new contract was drawn up in June 2016 for a considerably lower sum of €10.85 million. This represented a staggering reduction of approximately 44% from the initial valuation. The Audit Office's investigation revealed a disconcerting lack of substantiation for this precipitous price drop. Crucially, no independent valuation was conducted to justify the diminished market worth of the asset, nor were any explanations provided for sudden market shifts or an alleged impairment of value.
The Audit Office's report expresses profound disappointment with the Tax Department's failure to probe this transaction at the time it occurred. Investigators found no pertinent information within the tax files of the companies involved that could elucidate the rationale behind such a substantial price concession. The structure of the revised agreement suggested that the vendors were foregoing a considerable sum without any discernible compensatory benefit, a circumstance that should have triggered a closer examination by fiscal authorities.
The implications of this oversight are manifold. The selling party, through the recorded loss of €7.74 million against the property's value stemming from the reduced sale price, was able to offset €4.45 million of its taxable corporate profits for the 2016 fiscal year. This effectively means that the government may have been deprived of significant tax revenue, both from corporate profits and potentially from Value Added Tax (VAT) that would have been levied on the original, higher sale price. The Audit Office's findings imply that the acceptance of a sale price that deviates so markedly from market realities, without proper justification, constitutes an offense and undermines the integrity of the tax system.
The lack of transparency and due diligence surrounding this property sale has cast a shadow over the regulatory framework governing large-scale commercial transactions in Cyprus. The Audit Office's report serves as a stark reminder of the imperative for robust oversight and proactive investigation by tax authorities to safeguard public finances and ensure equitable tax contributions from all entities, regardless of their prominence. The ramifications of this particular case are likely to reverberate, prompting calls for enhanced scrutiny of similar deals and a re-evaluation of the procedures in place to detect and deter fiscal impropriety.