Cyprus is at risk of losing foreign investment if it makes any changes to its “favorable” tax environment, according to a group representing international banks operating in the country.
If the overall tax burden continues to increase, “some of our members will begin with layoffs, which will put additional pressure on the existing unemployment crisis, and eventually consider alternative jurisdictions to Cyprus,” the Association of International Banks said in a statement today.
The business group, which represents 24 lenders including units of Barclays Plc and the Russian Commercial Bank, said it sees a contribution to a proposed financial-stability fund designed to help troubled banks “as an additional tax.” It could increase the overall tax burden for banks “with substantial obligations” to up to 16 percent of their annual earnings, the group said.
“The favorable tax environment of Cyprus has been stable for many years and this has attracted a large number of international banks” and other investors, the association said. “This stability is now under considerable attack.”