Corporate Tax, Elias Neocleous & Co LLC updates


Contributed by Elias Neocleous & Co LLC
Reference rates for notional interest deduction for 2018
  • Cyprus
  • March 02 2018

Article 9(B) of the Income Tax Law 2002 (as amended) provides for a notional interest deduction for tax purposes on new equity capital injected into companies and permanent establishments of foreign companies on or after January 1 2015 to finance business assets, calculated by applying a reference rate to the new equity. The Tax Department recently announced the 10-year government bond yields for December 31 2017, which will be used as the basis for the notional interest deduction for the 2018 tax year.

Further extension for applications to settle tax arrears by instalments
  • Cyprus
  • January 26 2018

The Process of Adjustment of Tax Arrears Law 2017 establishes a procedure for settling tax arrears by monthly instalments and provides a waiver of interest and penalties of up to 95% for all nationally imposed taxes. Although the law was enacted in February 2017, it did not take effect immediately in order to allow time for the necessary payment systems to be implemented. The deadline for submitting applications to participate in the scheme was originally set at three months, but was recently extended.

New double tax agreement between Cyprus and Saudi Arabia
  • Cyprus
  • January 19 2018

Cyprus and Saudi Arabia recently signed an agreement for the avoidance of double taxation with respect to taxes on income and the prevention of tax evasion. The agreement provides for the exchange of financial and other information in accordance with the relevant article of the Organisation for Economic Cooperation and Development Model Convention for the Avoidance of Double Taxation on Income and on Capital. It will take effect once formal ratification procedures have been completed.

Taxation of deemed benefits on loans and advances to directors and shareholders
  • Cyprus
  • January 12 2018

The Tax Department recently issued Interpretative Circular 14, which has clarified the application of the Income Tax Law regarding a deemed benefit which is to be assessed on any drawings, loan or other financial facilities granted by a company to a non-resident director or shareholder or their spouse or close relatives. The circular clarifies that the deemed benefit is taxable in full, regardless of the period of residence of the individual in question.

Treatment of additional taxes for deemed distribution purposes
  • Cyprus
  • January 05 2018

The Cyprus Tax Department recently clarified the treatment of additional taxes imposed under the Assessment and Collection of Taxes Law. The department has specified that any additional tax is to be treated as such, meaning that penalties and interest will be imposed if they are not paid on time. The taxes are included under the term 'corporation tax' and are deductible from accounting profits for the purpose of calculating the deemed distribution for special defence contribution tax.

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