The Cyprus Tax Authorities issued a number of circulars covering various aspects, during January and February 2018. The purpose of this article is to provide an update on what we feel are the most important circulars issued.
Circulars
- Explanatory Circular 220 dated 02 January 2018 regarding the renting of immovable property: this circular attempts to provide guidance and clearance in relation to the amendment to the VAT Law,Law N.157(I)/2017, as published in the Government Gazette on 13 November 2017 (the “Law”). In summary, the Law now makes VAT registration mandatory and hence the imposition of VAT in cases where an immovable property is being rented for business purposes. The Law does not affect any contracts entered into prior to the imposition of the new legislation. In case however there is any change to an existing arrangement, then this may be deemed as a new contract and hence the revised Law would be applicable.
- Explanatory Circular 222 dated 09 January 2018 deals with VAT treatment for Holding Companies: this circular was analysed in our previous month’s article. Please click hereto read the article.
- Explanatory Circular 16 dated 09 February 2018 regarding the 10% Corporation Tax penalty1; through this circular it was clarified that for practical purposes, during the computation of the 10% penalty for the incorrect calculation and payment of provisional taxes, any foreign tax withheld, will be considered as provisional tax payment, even if a provisional tax form was not filed. Hence the 10% penalty will be calculated on the remaining amount.
- Explanatory Circular 18 dated 09 February 2018 regarding the Assessment and Collection of Taxes Law number 4/78 as revised: this circular clarifies that Financial Statements are required to be prepared and audited by an approved auditor should a physical person exceeds the amount of EUR 70,000 (Seventy thousand Euro), as turnover from business activities. The circular clarifies that in if the physical person has other sources of income, such as dividends, interest, rent, etc. these are also required to be taken into consideration in order to identify whether the amount of EUR 70,000 is exceeded and therefore Audited Financial Statements are required. Furthermore, the circular clarifies that this requirement only applies to physical persons that carry out business activities.
- Explanatory Circular 12 dated 21 February 2018 regarding the Double Tax Treaty (DTT) between Cyprus and Ethiopia: this circular informs us that the relevant procedures required by the laws of each country for the entry into force of the DTT between Cyprus and Ethiopia, which was signed on 30 December 2015, were completed and the DTT has been entered into force on 19 October 2017. The provisions of the DTT apply in Cyprus in relation to Withholding Taxes (WHT) on paid or received amounts at or after the 1 January 2018 and in relation to other taxes for amounts of any tax year that starts at or after 1 January 2018.
- Explanatory Circular 21 dated 21 February 2018 regarding the Double Tax Treaty (DTT) between Cyprus and Barbados: as per the above, this circular informs us that the relevant procedures required by the laws of each country for the entry into force of the DTT between Cyprus and Barbados, which was signed on 3 May 2017, were completed and the DTT has been entered into force on 11 September 2017. The provisions of the DTT apply in Cyprus in relation to Withholding Taxes (WHT) on paid or received amounts at or after the 1 January 2018 and in relation to other taxes for amounts of any tax year that starts at or after 1 January 2018.
Should you find any of the above circulars of your interest, please feel free to contact our tax experts at Savva & Associates Ltd, who will provide you with a more detailed analysis of the requirements of the specific update, and advise you on all actions required so as to be compliant with the revised Law.
The Cyprus Tax Authorities issued a number of circulars covering various aspects, during January and February 2018. The purpose of this article is to provide an update on what we feel are the most important circulars issued.
Circulars
- Explanatory Circular 220 dated 02 January 2018 regarding the renting of immovable property: this circular attempts to provide guidance and clearance in relation to the amendment to the VAT Law,Law N.157(I)/2017, as published in the Government Gazette on 13 November 2017 (the “Law”). In summary, the Law now makes VAT registration mandatory and hence the imposition of VAT in cases where an immovable property is being rented for business purposes. The Law does not affect any contracts entered into prior to the imposition of the new legislation. In case however there is any change to an existing arrangement, then this may be deemed as a new contract and hence the revised Law would be applicable.
- Explanatory Circular 222 dated 09 January 2018 deals with VAT treatment for Holding Companies: this circular was analysed in our previous month’s article. Please click hereto read the article.
- Explanatory Circular 16 dated 09 February 2018 regarding the 10% Corporation Tax penalty1; through this circular it was clarified that for practical purposes, during the computation of the 10% penalty for the incorrect calculation and payment of provisional taxes, any foreign tax withheld, will be considered as provisional tax payment, even if a provisional tax form was not filed. Hence the 10% penalty will be calculated on the remaining amount.
- Explanatory Circular 18 dated 09 February 2018 regarding the Assessment and Collection of Taxes Law number 4/78 as revised: this circular clarifies that Financial Statements are required to be prepared and audited by an approved auditor should a physical person exceeds the amount of EUR 70,000 (Seventy thousand Euro), as turnover from business activities. The circular clarifies that in if the physical person has other sources of income, such as dividends, interest, rent, etc. these are also required to be taken into consideration in order to identify whether the amount of EUR 70,000 is exceeded and therefore Audited Financial Statements are required. Furthermore, the circular clarifies that this requirement only applies to physical persons that carry out business activities.
- Explanatory Circular 12 dated 21 February 2018 regarding the Double Tax Treaty (DTT) between Cyprus and Ethiopia: this circular informs us that the relevant procedures required by the laws of each country for the entry into force of the DTT between Cyprus and Ethiopia, which was signed on 30 December 2015, were completed and the DTT has been entered into force on 19 October 2017. The provisions of the DTT apply in Cyprus in relation to Withholding Taxes (WHT) on paid or received amounts at or after the 1 January 2018 and in relation to other taxes for amounts of any tax year that starts at or after 1 January 2018.
- Explanatory Circular 21 dated 21 February 2018 regarding the Double Tax Treaty (DTT) between Cyprus and Barbados: as per the above, this circular informs us that the relevant procedures required by the laws of each country for the entry into force of the DTT between Cyprus and Barbados, which was signed on 3 May 2017, were completed and the DTT has been entered into force on 11 September 2017. The provisions of the DTT apply in Cyprus in relation to Withholding Taxes (WHT) on paid or received amounts at or after the 1 January 2018 and in relation to other taxes for amounts of any tax year that starts at or after 1 January 2018.
Should you find any of the above circulars of your interest, please feel free to contact our tax experts at Savva & Associates Ltd, who will provide you with a more detailed analysis of the requirements of the specific update, and advise you on all actions required so as to be compliant with the revised Law.
