ANNOUNCEMENT OF THE DIRECTOR OF INLAND REVENUE

The Director of Inland Revenue would like to remind taxpayers that after the expiry of the extension until 30th September 2011, Administrative Fines will be imposed, by virtue οf the following laws.

 

  • The Assessment and Collection of Taxes (Amendment) Law of 2010, Ν.136(Ι)/2010
  • The Special Contribution for the Defence of the Republic (Amendment)(No.2) Law of 2010 Ν.132(Ι)/2010·
  • The Assessment of Capital Gains (Amendment) Law of 2010 Ν.135(Ι)/2010·and
  • The Assessment of Immovable Property (Amendment) Law of 2010 Ν.134(Ι)/2010

 

All those who have not settled their dues to the Department within the time specified in the law are invited to do so immediately.

 

From 1.10.2011, in accordance with the Assessment and Collection of Taxes Law, 5% will be added to all amounts due, provided the payment date specified has expired.

AMENDMENTS OF THE CYPRUS COMPANY LAW, CAP. 113

(amended by the amendment Law 117(1)/2011, published in Cyprus Gazette on 31/08/11)

 

Annual Levy of €350

As from 2011 all companies incorporated in Cyprus shall pay annual levy of €350 to the Registrar of Companies.

For groups of companies the maximum levy is fixed at €20,000.

  

Time –limit of payment:

For the year 2011 – till 31st December 2011

After 01/01/2012 – till 30th June of the respective year

 

Exemptions:

  • New Companies regarding to the year in which they were incorporated
  • Dormant companies
  • Companies, which do not own any assets
  • Companies, which own assets located in the non Governments controlled areas of Cyprus

 

Penalties for non- payment of annual levy:

The following penalties shall apply in case of non- payment of the annual levy:

  • 10% if the levy is paid in the period 1st July – 30th September of the year 2012/ the following years
  • 30% if the levy is paid in the period 1st October - 30th December of the year 2012/ the following years
  • Struck off from the Company Registrar if the levy is not paid till 1st January of the year 2013/ following years

Restoration in the Company Registrar:

  • Within 2 years from the date of being struck off and the fee of €500 is paid to the Company Registrar
  • After 2 years from the date of being struck off and the fee of €750 is paid to the Company Registrar

For further information, please contact:

Elena Oratis

Advocate

This email address is being protected from spambots. You need JavaScript enabled to view it.

(+357) 25508000

AMENDMENTS TO INCOME TAX LAW

THE MAXIMUM PERSONAL INCOME TAX RATE IS INCREASED TO 35%

(Came into effect on 1st January 2011)

 

A new income tax rate of 35% is introduced for INDIVIDUALS on taxable income, which is bigger than €60,000

 

TAX INCENTIVES FOR THE EMPLOYMENT IN CYPRUS OF HIGHLY PAID NON CYPRIOT TAX RESIDENT INDIVIDUALS

(Will come into force on 1st January 2012)

Having the purpose to encourage the establishment or expansion of new business in Cyprus, tax incentives are offered to persons, who are NON RESIDENTS of Cyprus in case of their employment in Cyprus. It concerns just highly paid individuals, whose income from employment exceeds €100,000 per year. In this case 50% deduction of tax regarding to this income is allowed for the period of the first 5 years of his employment in Cyprus.

It is granted to Cypriots and non Cypriots provided that prior to employment in Cyprus such person was a resident outside of Cyprus and was not considered as a tax resident of Cyprus.

 

EXEMPTION FROM TAXATION OF THE PRESIDENT OF THE REPUBLIC AND THE PRESIDENT OF THE HOUSE OF REPRESENTATIVE IS ABOLISHED

AMENDMENT TO THE SPECIAL CONTRIBUTION FOR DEFENCE OF THE REPUBLIC LAW

(Entry into force with immediate effect)

 

THE RATE OF DEFENCE TAX ON INTEREST IS INCREASED FROM 10% TO 15%

The special defence contribution tax rate on interest received or credited by CYPRIOT TAX RESIDENTS is increased from 10% to 15%. This new provision applies to both individuals and companies. It applies to the interest received from sources within Cyprus and outside of Cyprus.

Please note that in case of companies if the interest results from the business, which is ordinary carrying on it is not subject to the special defence contribution tax. In this case it is a subject to corporate income tax. Therefore companies which main activity is financing, or which is involved in intra- group financing activities will not be affected by this amendment to the Special Contribution For Defence Of The Republic Law.

In case of interest payments to non Cypriot residents the defense tax is not paid.

 

THE RATE OF DEFENCE TAX ON DIVIDENDS IS INCREASED FROM 15% TO 17%

Please not that it applies only to individuals as companies are generally exempt from the payment of defence tax on dividends.

The increase in rate will apply as well in case of deemed distribution rules where a tax resident company does not distribute more than 70% of its after tax profits within 2 years.

The deemed distribution rules are not applicable in case where shareholders of a resident company are NON tax residents of Cyprus.

Please note that if a Cypriot tax resident company is owned by another Cypriot tax resident company and which in turn is owned by non residents the deemed distribution rules shall be applicable.

No defence tax is levied on dividends paid to non- resident individuals or companies

UPDATING THE ACCOUTNING RECORDS

According the amendments in the Cyprus Tax Law in December 2010 the accounting records of a Company should be updated until the end of the fourth month following the month in which the transaction took place. The above requirement applies to companies as of 1 January 2011. Therefore, the companies should update their accounting records at least on a quarterly basis.

Failure to update the accounting records within four months from the month of transaction will attract a fine of Euro100 as per Article 50A (a) of the Assessment and Collection of Taxes Law. The fine will be imposed on a quarterly basis starting on 1 January 2012.

 

Example: A tax audit takes place on 30.11.2012 and reveals that the accounting records of the company have not been kept updated since the beginning of the year. A fine will be imposed for each quarter that a default has occurred as follows:

Transaction date

Deadline to record in the accounting books of the company

Fine imposed

31.03.2012

31.07.2012

€100

30.06.2012

30.10.2012

€100

 

Total Fine

€200

 

Areti Charidemou & Associates LLC Law Firm