Further to our previous newsfeeds on this matter, this is to note that many business and employment (among others) related measures have been voted in to law by the Cyprus Parliament on 27 March 2020. Below we are presenting what has been enacted related to the General Healthcare System, Income Tax and VAT. The amending laws have been published in the Official Gazette of the Republic of Cyprus and are now in effect.
General Healthcare System
The reduction in the contributions to the General Healthcare System based on the rates which were in force up to 29 February 2020 (for more details please refer to our recent newsfeed) was decided for three months after all instead of two as it was the initial plan. The reduction will in general apply for the months of April, May and June 2020.
The Collection of Taxes and Assessments Law has been amended to enable the Minister of Finance to modify the deadline for submission of tax returns and the deadline for settlement of the related liability via a Ministerial Order.
The deadline for the submission of income tax returns that were due by 31 March 2020 will be extended to 31 May 2020 (in practice until 1 June 2020 as 31 May falls on a Sunday). This deadline concerns the 2018 corporate tax returns (TD4) and the 2018 personal income tax returns (TD1) of individuals preparing audited financial statements.
Extension of deadline for payment of VAT liability
The extension of the deadline for the payment of VAT liability has been extended to cover the following periods:
· 29 February 2020 (due 10 April 2020)
· 31 March 2020 (due 10 May 2020)
· 30 April 2020 (due 10 June 2020)
The conditions related to the size of a business based on their turnover subject to VAT or the impact of the outbreak on the turnover of a business have been removed.
No penalties and interest will be imposed with regards to the payment of any due VAT for the periods mentioned above as long as the following are adhered to:
· the VAT return is submitted by the due date; and
· any VAT payable is paid by 10 November 2020.
As long as these conditions are satisfied, the following will not be applicable for the above mentioned periods:
· surcharge of 10% on VAT payable amounts;
· annual interest of 1,75% thereof; and
· criminal sanctions for failure of VAT payments and submission of tax returns.
Since the VAT Return needs to be submitted on time the penalty its late submission will continue to apply and will continue to constitute a penal offence.
The application of the amendments does not apply to the following types of businesses:
· Producers of electricity
· Collection and distribution of water (for water supply)
· Groceries and supermarkets that are mainly for food
· Convenience stores and mini markets
· Retail trade of a variety of goods in department stores where food, beverages and tobacco do not prevail
· Retail trade of fruit and vegetables
· Retail trade of meat and meat products including poultry
· Retail trade of fish and seafood
· Retail trade of bread, other bakery and confectionery products
· Retail trade of fuel
· Retail sale of computers, peripherals, software and video games
· Retail sale of books
· Retail sales of newspapers and stationary
· Retail sales of toys of all kinds except video games
· Cyprus Telecommunications Authority (CYTA)
· Internet services
· Satellite telecommunications services
· Other telecommunication services, besides CYTA
Temporary reduction in VAT rates
The temporary reduction in VAT rates from 19% to 17% and from 9% to 7% has been abolished as it has been assessed that the administrative cost of implementing them outweighs any benefit expected to be generated.