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Society

China Squeezes Chinese Buying Cyprus Golden Visas, Properties

February 25, 2019

China’s government is reportedly trying to hunt down tax cheats, including wealthy people buying up property on Cyprus to get so-called Golden Visas that give them residency permits and European Union passports while even members of the Diaspora abroad with Cypriot heritage have to wait.

China is applying new tax rules in a bid to keep citizens from spiriting money abroad and hiding their assets in foreign properties, such as on Cyprus, which has been accused of selling the visas without vetting applicants for possible tax evasion, money laundering or criminal activities.

Implementation of the Common Reporting Standard (CRS) which focuses on the exchange of information between China and other countries showed a large number are tax dodgers who will be chased to pay what they owe, the financial news agency Bloomberg reported.

CRS can be used to find a Chinese citizen opening an account in a Cypriot bank with Cypriot authorities required to notify Chinese officials, and vice versa, although real estate is excluded, making it easier to hide assets than cash.

The Paris-based Organization for Economic Co-operation and Development said it’s also up to banks to ask for the additional information from foreigners and then forward it to the tax officials in their countries, INSIDER said.

The Bloomberg report said Chinese have taken advantage of Cyprus’ Golden Visa program that has drawn scrutiny from European Union officials although it was defended by Cypriot President Nicos Anastasiades who said other countries have worse records vetting applicants.

A Cypriot Foreign Ministry study showed it is mostly Russians and Chinese who obtained Cypriot citizens by investing primarily in real estate and that Limassol is the top choice for f Russians who buy apartments in high-rises, while the Chinese choose Paphos to invest in houses.

The sale of so-called Golden Visas, allowing rich foreigners to buy residency permits and European Union passports, has special risks in several countries, including Cyprus, which doesn’t require purchasers to even step foot there, the European Commission warned.

Bulgaria, Cyprus and Malta offer passports to investors without any real connections to the countries by paying between 800,000 and 2 million euros ($909,000 to $2.3 million) with the visas likely helping organized crime groups infiltrate the EU and launder money.

Cyprus is still fighting a reputation for being a tax haven for tax cheats and criminals from other countries wanting to hide their money and has come under withering criticism for the Golden Visas being offered without, critics said, proper vetting of who’s getting them.

Investment can range from 13,500 euros to over 5 million euros ($15,350 to $5.7 million) in the form of capital and property investments, buying government bonds, one-time payments to the national budget or certain donations to charity.

Cyprus toughened up vetting procedures last year after it was accused of running a “passports-for-cash” scheme. It said passport numbers would be capped at 700 a year.

The Mediterranean island introduced the scheme in the wake of a 2013 financial crisis that brought the country to the brink of bankruptcy and forced it to accept a 10-billion euro ($11.35 billion) bailout from international creditors. One Cyprus lawmaker had estimated that the scheme generated around 4.8 billion euros ($5.4 billion) between 2013-16.

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