The outbreak of the coronavirus (COVID-19) is creating an unprecedented challenge for the whole world. Having been recently declared as a global pandemic by the World Health Organization, the virus is causing a huge distraction to our day to day personal and professional working lives.
The Cyprus Government announced on 15 March 2020 a package of actions and measures in order to support the country’s economy, including some related to tax and VAT, the most important of which are briefly presented below.
The reduction in the contributions to the General Healthcare System for two months based on the rates which were in force up to 29 February 2020 (for more details please refer to our recent newsfeed).
o Businesses with turnover not exceeding €1 million based on the turnover of the VAT returns that were submitted during 2019, and
o Businesses whose turnover has been reduced by more than 25% as a result of the outbreak.
Furthermore, arrangements will be made so that the postponed VAT liability can be paid by instalments until 11 November 2020.
Τhe deadlines for the submission of the VAT returns are not affected.
o Standard VAT rate: from 19% to 17% for a period of two months; and
o Reduced VAT rate (applicable mainly to hotels, restaurants and domestic transportation): from 9% to 7% for a period of 3.5 months.
The reduction of the rates will be applicable immediately following the voting of the relevant bill by the Parliament.
Further details with regards to the measures taken and any other measures to be decided will be reported as they become available.