Cyprus prepared to raise corporate tax hike in bailout

Cyprus is prepared to accept increasing its low corporate tax rate as part of an international bailout deal, dpa quoted a senior official as saying on Tuesday. Nicosia currently has one of the lowest corporate tax rates in the European Union at 10 per cent and, according to Christopher Pissarides, an advisor to newly elected President Nicos Anastasiades, the rate will likely be increased to 12.5 per cent. 'It is not important whether the tax goes up to 12.5 per cent or 11 per cent, what is important is that it stays at a stable rate for many years,' Pissarides, who is the co-winner of the 2010 Noble Prize in economics and heads a presidential economics advisory body, told Cypriot state broadcaster RIK. He also said that international lenders, the European Commission, the European Central Bank and International Monetary Fund (IMF), have ruled out the possibility of asking Cypriot bank depositors and bondholders to end up sharing the cost of a bailout, saying it would destabilise financial markets in Cyprus and across the eurozone. Cyprus had first indicated in June that it would seek aid, but the process was delayed by tough negotiations with the previous government, followed by presidential elections which brought Anastasiades to power last month. The bailout is meant to rescue Cypriot banks, which have taken enormous losses on bad Greek debt investments. Cyprus' newly elected government has also agreed to a private audit of its efforts to combat money laundering. The rescue package, estimated at about 17 billion euros (22.1 billion dollars), is embroiled in German accusations that Cyprus is a haven for money launderers and tax evaders. The amount is equivalent to the country's annual economic output, causing many to question whether it will be able to pay it off.