Laws Voted By The Parliament

The House of Representatives voted a number of changes in the laws on 18th of April 2013 as part of the agreement concluded with ESM and IMF for financial assistance to Cyprus.

The changes in the laws are summarized below:

(a) Corporation Tax:
 
The corporation tax rate imposed on Companies’ taxable profits is increased from 10% to 12,5% starting from 1st of January 2013.
 
(b) Special Defence Contribution:
 
The special defence contribution on interest income earned by Cyprus tax residents is increased from 15% to 30%. The law comes into effect from the date of publication to the Government Gazette.
 
It is noted that the increase does not affect the SDC rate applicable to dividends. Also any person having total annual income of less than Eur 12,000 is entitled to a refund for SDC imposed on interest income exceeding 3%. The SDC rate imposed on interest income deriving from saving certificates issued by the government and government bonds remains at 3%.
 
(c) Special Levy on Credit Institutions Law:
 
The special levy imposed on credit institutions operating in Cyprus on their total deposits increases from 0,11% to 0,15% starting from 1st of January 2013.
 
(d) Consumption tax: 
 
The consumption tax rates will increase on a regular basis following approval by the parliament.
 
(e) Freeze of promotions in the public sector:
 
Any promotions in the public sector and in the semi-government organizations will be frozen in 2013.
 
Important Notes:
 
Cyprus maintains important tax advantages including the following:
 
(a) Dividends received by a Cyprus Company from abroad exempts from tax.
(b) Gains from disposal of securities exempt from tax.
(c) Wide range of Double Taxation Treaties.
(d) Any tax losses are carried forward for future utilization for a period of five years.
(e) Any expenses incurred by the Cyprus Company are tax deductible provided that they were incurred for the Company’s business.
(f) Interest income earned by the Cyprus Company and forms part of its ordinary activities exempts from special defence contribution and is subject to corporation tax.
(g) Profits of a permanent establishment from abroad exempts from tax in Cyprus.
(h) Unilateral tax relief.
Please feel free to contact our office for more information on the above.

Antonis Chrysanthou FCCA
Managing Director
CPV Audit Services Limited