Cyprus may raise deposit levy to 12.5% for large accounts – report

End the Lie

Cyprus is currently deciding whether to raise the anti-crisis tax on savings larger than 100,000 euros to 12.5%, while reducing the levy on smaller amounts to 3 per cent, a source told Reuters.

The Cypriot government has been discussing with its European creditors the idea of reducing the levy on deposits smaller than 100,000 euros to 3 per cent, Reuters reported citing an anonymous source who is close to talks.  

To counterbalance the measure, the government proposed to increase the tax on large sums to 12.5 percent from the originally proposed 9.9, the source said.

The last minute discussions are allegedly aimed at appeasing ordinary Cypriots who are about to share a major part of the anti-crisis burden imposed on Cyprus by the European Central Bank.

Cyprus became the fifth country to ask for immediate aid from the Eurozone. But in a drastic twist from the previous cases, the European finance ministers demanded Cyprus seize a significant portion of all deposits in the country’s banks in order to secure a 10 billion euro bailout.

The original agreement suggested 9.9 and 6.7 per cent levies on deposits above and below the 100,000 euro threshold respectively.

Although in general terms the bargain was settled with the European lenders late on Friday, the Cypriot government still has to come to an agreement on the exact details and pass a law that will allow such a move.

In the meantime all banks in Cyprus have frozen the amounts required to pay the tax on their clients’ deposits and stopped all transactions, including electronic, before going to a long holiday weekend.

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