TUESDAY, 20 AUG 2019

 

CONNECT

Facebook Linked In Twitter
GAP_Group_2019_728x90px
GloriaJeans_266x90px
IMH LTD

Anastasiades and SG Envoy Lute Agree to Continue Consultations for Cyprus Solution

US Delays Huawei Trade Ban for Another 90 Days

IMH LTD
GAP_Group_2019_468x60px

OPINION

Increase in Social Insurance Contributions and Implementation of the National Health Insurance System

Increase in Social Insurance Contributions and Implementation of the National Health Insurance System

The Social Insurance plan and the imminent implementation of the National Health Insurance System (NHIS) are among the most crucial chapters of the state’s Social Policy. As of 1 January 2019, there will be changes to the contributions by employees, the self-employed and the optionally insured to the Social Insurance Scheme (SIS). More specifically, according to the Social Insurance Law, the contribution by employees will increase from 7.8% to 8.3%, by the self-employed from 14.6% to 15.6%, and by the optionally insured from 13% to 14%, while the contribution by the optionally insured who are employed by a Cypriot employer abroad will increase from 15.6% to 16.6%.

The contributions for the implementation of the NHIS will also begin in 2019. Specifically, as of 1 March 2019, employees will contribute 1.7% of their wages, employers 1.85% of each employee’s wages, while the self-employed will contribute 2.55% of their insurable income. As of March 2020, with the full implementation of the NHIS, these percentages will increase to 2.65% for employees, 2.90% for employers and 4% for the self-employed.

Once the above regulations are introduced, there will be some significant changes for employees and businesses, with a domino effect of consequences that may have an impact on the economy as a whole.

The unifying, amending Law on Social Insurance adopted in 2010 includes the variations for the contributions to the specific fund up until the year 2039; however, these do not take into account various improbable, yet important factors for the Cyprus economy. The fact that there have been no changes to the relevant law since it was passed to balance it out, is quite telling; especially considering the significant developments that have taken place in the meantime, the most important of course being the haircut on bank deposits in March 2013. The increase of the contributions payable to the Social Insurance Fund (SIF) could well have been considered negligible, if it was not for this event. In reality though, this will be an additional expenditure for all categories of insured citizens, when many of them are still trying to recover. Furthermore, the increased costs reduce the chances of new recruitments, while also increasing the risk of reductions to workforces in businesses that find it difficult to manage the additional expense.

At the same time, the provision of Public Healthcare services is undoubtedly one of the most important benefits that a well-run state can offer its citizens. In the case of the NHIS, however, the substantive reduction of citizens’ disposable income may likely lead to a series of other problems, as regards the liquidity and the ability to repay debts by citizens who as a majority make up the middle class. This will make it difficult for individuals to maintain the same standard of living as they had before the increase in the Social Insurance contributions and the introduction of NHIS contributions.

Therefore, it is imperative that the competent authorities promote counterbalancing measures so that the increases in SIF contributions and implementation of the NHIS have the least possible financial impact on the citizens and businesses of the Republic of Cyprus.

 

*Head of Human Resources, Payroll and Immigration Consulting Services at Ellinas Finance PCL

MORE ON OPINION

Tax Benefits for Foreign Nationals

Cyprus has been a member of the European Union since 2004 and adopted the euro in 2008. ...

FROM AROUND GOLDNEWS

   

Trump Calls for Big Rate Cut and Economic Stimulus

The US central bank should consider cutting interest rates by one percentage point and introduce "some quantitative easing" stimulus measures, ...
   

Amazon Under Fire for New Packaging that Cannot be Recycled

Amazon has been criticised by environmental groups and customers after introducing a range of plastic packaging that cannot be recycled in the UK, The Guardian ...
   

EY: Global IPO Market Shows Continued Signs of Slowdown in Q2 2019

The trend of unicorn IPOs coming to market and pushing their proceeds to historic levels continued in Q2 2019 despite ongoing geopolitical uncertainty and ...
   

Sony to Buy Insomniac Games

PlayStation console maker Sony Interactive Entertainment said on Monday it would buy privately held Insomniac Games Inc, known for developing games such as ...
   

KPMG in Cyprus Supports the Pancyprian Volunteerism Coordinative Council’s Campaign ‘Collecting School Supplies for Children’

Corporate Social Responsibility programme forms an integral part of KPMG’s corporate philosophy around the world, combining economic and business growth ...
   

US Delays Huawei Trade Ban for Another 90 Days

The US Commerce Secretary, Wilbur Ross, has confirmed a ban on Chinese technology giant Huawei will not come into force for another 90 days, the BBC reports. ...
   

Record Number of Tourists for July 2019

July 2019 had the highest volume of tourist arrivals ever recorded in Cyprus during the specific month, with arrivals of tourists reaching 550,971 in July 2019 ...
   

US Considers Activities of Yavuz as Unlawful

The United States considers the activities of Turkish drillship Yavuz off the north-eastern coast of Cyprus as unlawful, and urges the Turkish authorities to ...
 

YOUR COMMENTS

HEADLINES

MOST POPULAR

Taxatelier_09/08/-06/09_300X250px
Gold_Issue_300x250px

IMH LTD