On 27 January 2017, the Cyprus Parliament approved a new Law which provides a scheme that regulates the settlement of overdue taxes.
The Law applies to tax liabilities that relate to periods which precede the effective date of the Law and arise under the following laws:
- Income Tax Law,
- Special Defence Contribution Law,
- Immovable Property Tax Law (up to the date it was abolished),
- Capital Gains Tax Law,
- Special Contribution Law,
- VAT Law,
- Stamp Duty Law,
- Inheritance Law (up to the date it was abolished)
The effective date of the new Law as well as the relevant periods it will apply to, will be set by a notification that will be issued by the Commissioner of Taxation.
The overdue taxes will have to be settled in equal installments and the number of installments should not exceed:
- 54 installments for overdue taxes not exceeding €100.000, provided that each installment is not less than €50,
- 60 installments for overdue taxes exceeding €100.000, provided that each installment is not less than €1.852.
For overdue taxes that are regulated under the new Law, there will be no new interest and/or penalties and no criminal proceedings will be commenced by the Tax Department.
The Law provides for relief of interest and/or penalties which have been imposed on the overdue taxes. The amount of such relief will depend on the number of installments to be agreed. Details of the relief are expected to be clarified soon by the Commissioner of Taxation.
Taxpayers wishing to take advantage of the relief scheme should file an application to the Tax department within 3 months from the date the Law becomes enforceable.
The format of the application and the method of submission will be announced by the Commissioner of Taxation.
Once the decision of the Tax department regarding an application for relief has been communicated, the taxpayer will have to reply within 15 days either by accepting or objecting to the Commissioner’s decision. In the event of an objection by a taxpayer the Commissioner must respond within 30 days.
- 01 February, 2017