The outbreak and rapid spread of the COVID-19 has roiled markets and disrupted business, threatening the global and local economies. In an attempt to support local businesses to overcome the crisis related to the effect of COVID-19, Cyprus Government have announced a number of TAX measures, which are yet to be finalized and submitted for the Parliament’s approval within this week.
The key measures include among others the following:
- An extension of two-months on the Income Tax return filing deadline due on 31 March 2020. In this respect it has been decided that the new submission deadline for 2018 corporate income tax returns (Form T.D.4). This measure grants an extension to self-employed individuals who wish to file an objection in the event their request for payment of social insurance contributions based on their real income has been rejected by the Social Insurance Department.
- Non-payment, for a period of two months, of additional contributions to the general healthcare system by employers, employees and the government, in order to reinforce the health sector during the fight against the virus and not to affect the income of employees and business. The intention of the Government is to amend relevant provisions in the legislation in such a way that for the months of April and May 2020 reduced contributions, as those applied during Phase A of GHS, will be due by all contributors. In effect this implies that during the month of March 2020 the increased contribution rates applicable for Phase B of GHS will apply.
- Special arrangements to support taxpayers included in the scheme regulating the settlement of overdue taxes.
- A temporary two-month suspension of payment of VAT without the imposition of penalties as a measure to enhance liquidity for businesses. This measure would apply to businesses with turnover not exceeding EUR 1 million based on the VAT returns submitted during 2019, and businesses whose turnover has been reduced by more than 25%. Arrangements would be made for the VAT liability to be paid in installments until 11 November 2020. This measure will enhance the cash flow of businesses during the period in which liquidity issues are expected to arise
- Temporary reduction in the standard rate of VAT from 19% to 17% for two months, and in the reduced rate of VAT from 9% to 7% for 3½ months. The rate reductions would apply immediately following the approval of the relevant bill by the House of Representatives.
- An extension of two months for those that are obligated to submit a tax return by 31 March 2020 (new deadline is 31 May 2020).
For more information or legal advice, please contact your Harris Kyriakides partner or any of our lawyers.