Istos Global
News Details
LATEST TAX NEWS
New Laws voted by the Cyprus Parliament
New Law was enacted governing the provision of fiduciary and corporate services
NEWSLETTER

Subscribe to our email list to receive our latest news and articles

CONTACT DETAILS

Istos Global Limited

Tel: +357 22256324
Fax: +357 22256410
Emai: info@istosglobal.com

 

New Laws voted by the Cyprus Parliament
Saturday, April 13, 2013
 

 

The House of Representatives voted for a number of new and amending laws under the Memorandum of Understanding between the Republic of Cyprus and Troika in order to strengthen public finances.

 

1.       Annual Levy of €350

From 2013, the annual levy of €350 becomes payable for all registered companies in the Cyprus Companies Registry. With this amendment, all exemptions from the compulsory payment of the annual levy are eliminated. These exemptions related to companies that were dormant or had no assets or had property in the Turkish occupied areas. In addition, the maximum total fee payable of €20.000 for group companies is abolished. The annual fee is payable from the first year that a new company is registered.

 

2.       Value Added Tax (VAT)

The standard VAT rate increases to 18% (from 17%) for the period 14 January 2013 until 12 January 2014 and to 19% from 13 January 2014.

 

In addition, the reduced VAT rate increases from 13 January 2014 to 9% (from 8%), which mainly applies to services offered by hotels and restaurants.

 

3.       Capital Gains Tax

An amendment to the legislation clarifies how the base cost value of the property is determined when there is no valuation of the property as at 1 January 1980 by the Land Registry Office. In addition, the restriction over the increase of the value of the property, due to inflation, on 1 January 1980, which was considered for the calculation of Capital Gains Tax, in cases of immovable property located in the Turkish occupied areas, is withdrawn.

 

4.       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 (previously there was no such time limitation). Persons who have such obligations are legal entities (companies) and individuals with turnover in excess of €70.000.

 

 

5.       Bank Levy payable by Financial Institutions

During 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 (domestic and foreign), excluding interbank deposits. In accordance with 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 provision that the levy paid would not exceed 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

From 2014, the rate of Social Insurance Contributions increases by 1% for employers and employees who will contribute a total of 7,8% each. The contribution also increases for the self-employed and voluntary contributors who will contribute a total of 14,6%.

 

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

The provisions of the Special Contribution law for employees, pensioners and self-employed in the private sector to contribute a percentage of their gross monthly salaries/pensions is extended for an additional period of 3 years (until 31 December 2016). In addition, from 1

January 2014, the relevant bands of the special contribution change as follows:

 

Special Contribution 2012 - 2013

Special Contribution 2014 - 2016

Monthly Salary or Pension

% of Special Contribution

Monthly Salary or Pension

% of Special Contribution

€0 - €2.500

0%

€0 - €1.500

0%

€2.501 - €3.500

2,5%

€1.501 - €2.500

2,5%

€3.501 - €4.500

3,0%

€2.501 - €3.500

3,0%

€4.501 and above

3,5%

€3.501 and above

3,5%

 

8.       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 (excluded from the scope are lawyers and auditors that are already regulated by their respective regulatory bodies).

 

 

9.       Money Laundering

The powers of the Unit for Combating Money Laundering are more clearly defined. It is further clarified that the regulatory bodies of auditors and lawyers are also responsible for the supervision of services that these professionals provide with regards to trust services to third parties.

 

10.   Penalty for fraudulent omission or delay in tax payments

Where a person is convicted for fraudulent omission or delay in tax payments he may be subject to imprisonment for at least one year (previously the jail term would not exceed 6 months). In such a case, the competent authorities of the Republic of Cyprus are obliged to provide information about the individual who commits the offense, when such information is requested by the competent authorities of another state.

 

11.   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 automatic exchange of information and other forms of administrative cooperation.

 

12.   Other laws that were voted

Other laws voted include the following:

• Extension of the special contribution by government employees for a further two years to

2016

• Changes in the government pension plan

• Reduction in government employee emoluments and freezing of automatic salary increases

• Changes in the working hours of the government employees

• Reduction in the income bracket for the entitlement to student subsidies

• Reduction in the child subsidies

• Increases in Excise Duties on tobacco, alcohol and petrol

• Taxation of winnings from betting

 

In parallel to the above, the House of Representatives voted the following changes to ensure effective implementation of the recommendations made in the Global Forum on Transparency and Exchange of Information for tax purposes of the Organization for Economic Cooperation and Development (OECD).

13.   Law Amendments per the OECD Recommendations

 

• Companies established in Cyprus but are not tax residence in Cyprus, are obliged to submit tax returns until 31 December of the year following the tax year (or March 31 in case of electronic submission) to which they relate to.

 

• The keeping of accounting records is now mandatory for persons who have income from dividends and interest, whether they originate from sources within or outside the Republic of Cyprus. The purpose of that amendment was to include trusts in the provisions of the law for keeping accounting records.

 

• Share warrants may be issued only by Cypriot companies listed on regulated markets.

 

• Companies should keep their accounting records for six years after the end of the calendar year to which they relate to.

 

• It is now possible to provide information to the competent authorities of another state, based on agreements for the exchange of information or the Directive 2011/16/EE of the Council of European Communities of 15 February 2011 on administrative cooperation in the field of taxation. The Director of Inland Revenue is not required to inform the person to whom the information is requested for, if the information could impede the investigation being conducted.

 

Should you require more information regarding the above please to do not hesitate to contact us at: info@istosglobal.comor +357 22 256324.


Get Social:
Our PhilosophyOur People
Audit and Assurance ServicesTax ServicesFinancial Advisory ServicesGlobal Compliance ServicesTraining Services
Cyprus Tax System
Tax NewsBusiness News