Changes in Cyprus Tax Legislation

Changes in Cyprus Tax Legislation

Please be advised on some changes in Cyprus Tax Legislation:

1. Keeping of accounting books and records

  • Companies should keep their accounting books for 6 years after the end of the tax year. 
  • Both issued and received invoices which were declared for VAT purposes remain to be kept for 7 years.

2. Provisional corporate tax

  • The provisional tax assessment should be made before 31st July of the current year instead of 1st August.
  • Provisional tax should be paid in two installments - on 31st July and on 31st December of the current year.

3. Tax returns of non tax residents

  • Companies which are incorporated in Cyprus but are not Cyprus tax residents should submit their income tax return until the 31st December of the Year following the year of assessment.

4. Capital Gains Tax

  • Disposal of immovable property which is registered with the Department of Lands and Surveys is taxable under Capital Gains Tax.

5. Value Added Tax

  • For the period from 14th January 2013 to 12th January 2014, the standard VAT rate will be 18%. Аs from 13th January 2014 the standard VAT rate will increase to 19%.

6. IP rights

The new law was published in the official gazette on the 6th of July and is effective as from 1 January 2012. The main features are:

  • 80% of the net profit from the exploitation of such intangibles is exempt from Corporate Tax;
  • The net profit is calculated after deducting all direct expenses associated with the IP income;
  • The rate of capital allowance is 20% of the cost of the IP acquisition. Companies will be able write off any capital expenditure for the IP acquisition and its development for the initial 5 years.

It is expected that the Cypriot Tax Office will issue a detailed guidelines on taxation of IP income.

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