News

TAX ALERT

The House of Representatives voted on April 18th, 2013 a number of changes in the tax legislation as agreed with Eurogroup. The main changes are summarised below.

1. Increase in the Corporate tax rate

Corporate income tax rate is increased from 10% to 12,5% effective from 1st January 2013.

2. Increase in the Special Defence Contribution tax on interest income

Special Defence Contribution applied on interest income is increased from 15% to 30%, effective from the date of the publication of the law in the official Gazette of the Republic.

  • Special Defence Contribution on interest income is payable only by Cyprus tax residents (both individuals and companies). We note that interest income earned in the ordinary course of the business of a company (e.g. financing companies) will continue to be taxed under Corporation tax and will not be subject to Special Defence Contribution.
  • Non-Cyprus residents are exempt from Defence tax and no withholding taxes apply upon the payment of interest abroad.

3. Increase in the Annual levy on bank deposits

The bank levy on deposits payable by credit institutions is increased from 0,11% to 0,15%, effective from 1st January 2013.

Despite the changes summarised above, Cyprus continues to be an attractive jurisdiction for international clients with a favourable tax regime towards foreign investors. Main features of the Cyprus tax regime that remain unchanged include inter alia the following:

  • Dividend income is exempt from Income Tax
  • Profit from the disposal of securities is exempt from Income Tax
  • No withholding taxes apply upon the payment of dividends, interest and royalties abroad

Regarding the enforcement of restrictive measures on transactions in case of emergency act 2013

 

Order under Articles 4 and 5

Under Articles 4 and 5 of the Act, and upon the recommendation of the Director and with the consent of the Director, the following restrictions are imposed:

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Update on Cyprus economic situation

Eurozone finance ministers have agreed over the weekend a deal on a EUR 10 billion bailout for Cyprus to prevent its banking system collapsing and keep the country in the eurozone. As part of the deal a significant downsizing of the banking sector shall be affected almost immediately.

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Russian “Black List”

Cyprus has now been officially removed from the so called Russian Black List.

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Cyprus International Tax Treaty News

Tax treaty with Ukraine: -A new double tax treaty has been signed with Ukraine and the treaty shall be effective on January of the year in which the parties exchange notices of ratification.

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