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.
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.
The Tax Department recently extended the deadline for the submission of country-by-country reports to be filed by the end of 2017. The deadline for reporting entities to submit country-by-country reports for multinational groups for the fiscal year ending December 31 2016 has been extended by two months, while the deadline for Cyprus-resident constituent entities to file their notifications for the fiscal year ending December 31 2017 has been extended to January 15 2018.
With the extended deadline for the submission of applications for inclusion in the deferred settlement scheme for tax arrears established by Law 4(I)/2017 now less than one month away, the Tax Department has issued a further reminder of the scheme's main features. For example, all tax returns due must have been submitted and all tax liabilities for periods after December 31 2015 must have been settled or be in the process of being settled in accordance with an agreed payment schedule.
The Income Tax Law was amended in 2012 to introduce accelerated capital allowances for tax purposes on assets purchased between 2012 and 2014, inclusive. For plant and machinery acquired up to the end of 2018, the annual writing-down allowance rate will be 20% or any higher rate applying to the category of assets concerned. For industrial buildings and hotels acquired up to the end of 2018, the annual writing-down allowance will be 7%.