Tax Amendments 2013

The House of Representatives voted a number of new amendments in December 2012 in order to strength public finance and also to deal with the Memorandum of Understanding between the Republic of Cyprus and Troika.

1)      Annual levy of €350 for Cyprus registered Companies

As from 2013, all registered companies in the Cyprus Registrar of Companies will pay the annual levy of €350. With this amendment, all the previous exemptions for the payment of the annul levy are eliminated. These exemptions were in cases of dormant companies, companies that they had property in the Turkish occupied areas or group of companies.

The annual levy is payable from the first year of the registration of a company.

2)      Value Added Tax (VAT)

The VAT rate will be increased to 18%, from 17%, as from the 14th of January 2013 until 12th January 2014, and to 19% from 13th of January 2014.

Furthermore, the reduced VAT rates increases from 13th of January 2014 to 9% from 8%, which apply to services offered by hotels and restaurants.

3)      Restriction of Carry forward of Tax Losses

Persons who have an obligation to prepare audited financial statements will be able to carry tax losses incurred over the next five years from the end of the tax year in which they were incurred, to be offset against taxable income. Persons who have such obligations are legal entities and individuals with turnover in excess of € 70,000.

4)      Capital Gains Tax

The amendment to the legislation clarifies how to base the cost value of the property is to be determined where there is no valuation of the property as at 1st of January 1980 by the Land Registry Office.

5)      Bank Levy payable by Financial Institutions

In 2011 a Bank Levy was introduced on financial institutions operating in Cyprus for the years 2011 and 2012, amounting to 0,095% of their total deposits excluding interbank deposits.

According to the law, this levy should not exceed 20% of the total taxable income of the financial institution for the two years and any excess levy paid would be refundable. With retrospective effect from 2011, the provisions that the levy paid would not exceed the 20% of total taxable income as well as the provision for refund of the excess levy paid are removed. From 2013, the rate increases from 0,095% to 0,11% and the provisions of this law are extended indefinitely.

6)      Social insurance contributions

As from 2014, the rate of Social Insurance Contributions increase by 1% for employers and employees who will contribute a total of 7,8% each. The rate will also be increased for the self-employed and voluntary contributors who will contribute a total of 14,60%.

7)      Special Contribution on Salaries of Employees in the Private Sector.

An extension of 3 years (until 31 December 2016) has been given for the Special Contribution Law for employees, pensioners and self-employed in the private sector in order to contribute of their gross mostly salaries/pensions. Although,  as from 1 January 2014 the relevant bands of the special contribution will be change as follows:

€0 - €1.500

0%

€1.501 - €2.500

2,5%

€2.501 - €3.500

3,0%

€ 3.501 and above

3,5%

8)      Money Laundering

It’s clarified that the regulatory bodies of auditors and lawyers are responsible too for the supervision of services that these professionals provide with regards to trust services to third parties.

9)      Regulations for the provision of fiduciary and other corporate services

The provision of fiduciary and other corporate services is now regulated by the Cyprus Securities and Exchange Commission and the regulation applies to eligible persons providing such services to or from the Republic of Cyprus. (Lawyers and auditors are excluded because they are regulated by their regulatory bodies.)

10)   Exchange of information

Rules are set on the exchange of information between EU Member States which make it possible to cover all natural and legal persons of the EU. In addition, procedures are being clarified for the exchange of information upon request for the automatic exchange of information and other forms of administrative cooperation.

 

 

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