Cyprus: No taxes on Arab banks’ deposits

Authorities comply with
Lebanese and Arab bankers’ request

Cypriot authorities agreed to guarantee the safety of the nonresidents’ deposits in Arab banks established in the island, and not to impose any taxes on them. The World Union of Arab Bankers (WUAB) and the Union of Arab Banks (UAB) had warned Cyprus of the repercussions of imposing a ten percent tax on all bank deposits, as instructed by the European Union earlier.

Imposing taxes on deposits would have ruined Cyprus’s reputation as a financial center, and would have led to the migration of Arab and international deposits, said Joseph Torbey, head of WUAB.

Torbey said: “We asked Cypriot authorities not to implement the EU’s proposed taxes on deposits in Arab and Lebanese banks, because their financial situation is healthy.” These banks will not bear the burden of recapitalizing failing Cypriot banks, handled with the Cypriot government.

Torbey announced that an Arab Cypriot banking forum will be held under the title ‘Restoring Confidence’, to discuss economic and banking reforms.

The WUAB highlighted the importance of protecting financial institutions and depositors especially since Arab banks constitute a major ingredient in the global financial system. “We consider the return of financial stability to Cyprus a primary Arab and Lebanese interest,” said Torbey.