Cyprus Extends Tax Amnesty and Amends VAT Refund

Cyprus Extends Tax Amnesty and Amends VAT Refund

A tax amnesty introduced in November 2011 in Cyprus now is extended for the second time till December 31, 2013. The first period of tax amnesty has ended on March 31, 2012 and was initially extended till the end of October 2012.

This amnesty is an incentive for the settlement of outstanding tax debts up to the fiscal year 2008 without charging late payment interest and related penalties, but with a 5% surcharge on the amount of tax due. After the latest extension the benefit from the amnesty decreases with each additional month of delayed settlement: an additional 1% surcharge is imposed for each month of delay. Thereby, in order to apply the scheme up to March 31, 2012, the whole amount of the tax due must be settled at once, and from April 01, 2013 part payments against the tax due will also be possible.

Also some amendments were made regarding VAT refund. Earlier the Cyprus VAT legislation did not provide for payment of interest on any VAT refunds, and now it was amended in accordance with Directive 2008/9/EC. The payment of interest is now provided on the expiry of 4 months period after a refund claim was submitted. The 4 months period is extended to 8 months in the case a VAT investigation is carried out in relation to the refund claim. The rate of interest is 5% per year. This amendment applies for VAT periods commencing from March 2013 and later.

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