New tax law for settlement of overdue taxes

On 27^th January 2017, a new law was approved by the Cyprus parliament regarding a scheme for the settlement of overdue taxes.  This Law is applicable to Income Tax, Special Defence Contribution, Immovable Property Tax, Capital Gains Tax, Inheritance Tax, Special Contribution, Stamp Duty and VAT.

According to the scheme, the overdue taxes will have to be settled in equal instalments, the number of which should not exceed:

• 54 instalments for overdue taxes not exceeding €100.000, provided that each instalment is not less than €50
• 60 instalments for overdue taxes exceeding €100.000, provided that each instalment is not less than €1.852

No new interest and/or penalties will be charged and no criminal proceedings will commence for overdue taxes which are regulated under the provisions of the Law.

What taxes fall within the scheme:

The provisions of the Law apply to tax liabilities that relate to periods which come before the effective date of the Law and arise under Income Tax, Special Defence Contribution, Immovable Property Tax, Capital Gains Tax, Inheritance Tax, Special Contribution, Stamp Duty and VAT.

Application process to enter the regulated scheme:

A taxpayer who wishes to enter the scheme, should file an application to the Tax Department within 3 months from the date the Law entered into force.

The instalments will need to be paid to the Tax Department in the manner specified in the Commissioner’s decision.

The scheme may be cancelled in the following cases:

• delay in paying an instalment for more than 3 consecutive months, including the month the instalment was due or
• delay to pay any 3 instalments or
• failure to file tax returns and/or to settle current tax liabilities

The Law may be applicable also to taxpayers under criminal prosecution or for whom a court decree is still pending against in relation to overdue taxes subject to the approval of the Attorney General.

Published on Friday 10th February 2017