Amendments to the Assessment and Collection of Taxes Law

On 20 of August 2020, several amendments were enacted in the  Cypriot Assessment and Collection of Taxes Law. The amendments aim to improve tax compliance and grant the Commissioner of Taxation increased powers in relation to tax collection. The amendments affect individuals and companies.

Individuals

Submission of a personal Income Tax Return

As from the year 2020 (including) and onwards, all individuals (employees and self-employed without the obligation to prepare Audited Financial Statements) with income which is subject to Income Tax should submit an Income Tax Return. This tax return must be submitted not later than the 31st of July of the year following the year of assessment. For example, the 2020 Income Tax Return must be submitted before 31st July 2021.

For the tax years up to 2019 (inclusive), this obligation existed only for taxpayers earning a gross income of more than €19.500, which is the tax free amount.

A decree is expected to be issued by the Council of Ministers that will define certain categories of individuals that will be exempted from the obligation to submit an income tax return (applicable as of the tax year 2020 onwards).

Deadline for payment of taxes

The deadline for the settlement of any income tax due is the 31st of July of the year following the year of assessment, which is the same day that Income Tax Returns must be submitted. This amendment applies from the tax year 2020 onwards and relates to all individuals who do not have an obligation to prepare Audited Financial Statements.

Companies

Submission of a Corporate Income Tax Return

Every company which is incorporated in Cyprus (whether resident or not) has the obligation to submit a Corporate Income Tax Return by the 31st of March of the year following the year after the year of assessment. For example, the Corporate Income Tax Return of tax year 2019 should be submitted by 31st of March 2021. Cyprus incorporated but non-resident companies have the obligation to inform the Tax Authorities in relation to their status within 60 days from the date of their incorporation via a form approved by the Commissioner of tax.

Submission of a Revised Tax Return

Taxpayers have the right to submit a revised tax return within 3 years from the submission due date of the tax return for the relevant tax year.

For example, the 2020 income tax return can be revised up until 31 March 2025 (assuming filing deadline is 31 March, 2022).

In case of submission of a revised tax return, the taxpayer should pay any additional tax due within 30 days from the date of its submission. The law provides that a Revised Tax Return can be submitted in cases of:

  • Claim for a deduction, credit, allowance or relief as provided for in a Law, or
  • Correction of error or mistake, or
  • Compliance with the provisions of the tax laws.

A revised Tax Return cannot be submitted during a tax examination or tax audit.

Inspection of professional premises

For the purposes of exercising any powers provided within the Assessment and Collection Law, Cypriot Tax Authorities may enter and inspect any professional premises used for business operations without a prior notice during normal working hours. The Tax Department does not have the obligation to give to the relevant person reasonable notice for such inspections.

How can we help?

We are at your disposal to discuss the effect of the above provisions to your personal or business arragements.

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