Cyprus Parliament Raises Taxes

New amendments concern Corporate Tax and Special Defence Contribution.

Pursuant to the implementation of the decisions of the Eurogroup, the Parliament voted the following:

- Increase of corporate tax rate

The corporate tax rate is increased from 10% to 12,5%, as of January 2013.

- Increase in special defence contribution on bank deposit interest.

The special defence contribution on interest is increased from 15% to 30%, as of the date of the publication of the law. The special defence contribution on interest is payable by both legal and physical persons who are tax residents of Cyprus.

It is important to stress that Cyprus continues to be an attractive jurisdiction for international tax planning purposes. New corporate rate is one of the lowest in Europe, and some incomes are not taxable by corporate rate. There is no withholding tax and no thin capitalization rules in Cyprus, and last year a beneficial tax regime on IP rights income was introduced