Cyprus: Important tax updates in Cyprus at the end of 2017
The Cyprus Parliament passed important amendments directly impacting taxpayers during the last quarter of 2017. This briefing focuses on the modifications concerning income tax, overdue taxes and tax exemptions on loan restructuring. These amendments have an impact on computations of tax obligations and include revised deadlines with which companies will have to comply when fulfilling their tax responsibilities.
Amendments were made to the Income Tax Law 118(I)/2002 on October 5 2017. An important change was the increased allowance of 20% on tax deductible capital allowances for machinery and plants which was valid until the end of 2017. Moreover, the allowance for industrial and hotel buildings acquired during the tax year of 2017 was increased to 7% percent.
The amendment of Law 4(I)/2017 regarding outstanding tax liabilities aimed to extend the deadline for submitting applications for the regulation of outstanding tax liabilities by three months, from the previously set date of October 3 2017 to January 3 2018. Furthermore, it set the final deadline for the submission of all overdue tax returns at June 30 2018 on the condition that no tax returns would be accepted after this date. Applications relating to liabilities incurred up to December 31 2015 will be accepted only if (a) all tax returns have been submitted and (b) any taxes due after December 31 2015 have been fully paid or settled. Taxpayers who submit overdue returns by June 30 2018 will be able to incorporate/include taxes arising six months after the date of the notification of liability for the regulation of the outstanding tax liability plan.
Within the loan restructuring framework, the law provides for the non-imposition of taxes which relate to the restructuring of non-performing loans for the period between December 31 2015 and December 31 2017. The proposals passed by Parliament on October 5 2017 state that the non-imposition of taxes will be extended for an additional two years, to December 31 2019. The aforementioned change is important and has a direct impact on businesses restructuring their operations.
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