In December 2012 the House of Representatives voted on a number of new and amending laws, as a consequence of the Memorandum of Understanding between Cyprus and Troika.
The most important amendments are described below.
Increase in VAT rates
From 14 January 2013, the standard rate of VAT is increased from 17% to 18%. From 13 January 2014, it will be increased to 19%.
Also, From 13 January 2014, the reduced rate which applies to services offered by hotels and restaurants will be increased from 8% to 9%.
Special Levy Tax for all Cyprus companies
Please note that from 2013 the annual Special Levy Tax of €350 is applicable to all companies registered with the Cyprus Registrar of Companies.
The exemption for dormant companies is abolished and the maximum limit of €20.000 for groups of companies is also abolished.
The Special Levy Tax will be payable from the year of incorporation of a company.
Income Tax- time limitation for tax losses carried forward
Companies and individuals with a turnover exceeding €70.000 will be able to carry forward losses for only five years from the end of the tax year in which the tax loss arises.
This amendment is effective from 1 January 2012.
Increase in Social Insurance Fund Contributions
For the years 2014-2018 to the percentage of contribution to the Social Insurance Fund of employers and employees is increased to 7.8% while the contribution of self-employed individuals is increased to 14.6%.
Increase of Special Contribution for salaries and pensions of employees in the private sector
The Law regarding the special contribution on salaries and pensions of employees in the private sector is extended to 31 December 2016 and the calculation of the contribution for 2014 onwards is as follows:
Special Contribution 2012 – 2013 | Special Contribution 2014 – 2016 | ||
Monthly salary and/ or pension | % Contribution | Monthly salary and/ or pension | % Contribution |
€0 – €2.500 | 0% | €0 – €1.500 | 0% |
€2.501 – €3.500 | 2.5% | €1.501 – €2.500 | 2.5% |
€3.501 – €4.500 | 3.0% | €2.501 – €3.500 | 3.0% |
€4.501 and above | 3.5% | €3.501 and above | 3.5% |
Retention of books and records
From 1 January 2013, the period of retention of the books and records of any business is decreased to 6 years (rather than 7) from the end of the tax year to which the documents relate.
Temporary Tax Assessments
From 2013, the temporary tax must be paid in two installments (rather than three) as follows: 31 July and 31 December.
Decrease of Public Interest Rate
As of 1 January 2013, the Public Interest Rate has been decreased from 5% to 4.75%.