Bank profits in crosshairs in Cyprus

The future of a special tax on bank deposits paid to the state in Cyprus may be heading for a shift, though a final decision is not guaranteed.

The proposed change involves redirecting the 0.15% tax, which banks have paid into the Republic's Fixed Fund since 2011, toward social policy and addressing punctuality issues. The matter now rests with Parliament, where a majority will need to approve the shift, followed by government approval if the measure passes.

However, leftist opposition party AKEL's push to increase this tax due to perceived banks' "over-profiting" could complicate the plan. If AKEL's proposal raises the rate from 0.15% to between 0.20% and 0.30%, banks' annual contributions could jump from 69.5 million euros in 2023 to nearly €100 million.

Such an increase might create challenges for banks to sustain these payments, particularly as their...