Tax amendments-Cyprus

The first package of measures for the improvement of public finances was discussed and voted by the House of Representatives on 26 August 2011. We will review in this newsletter those measures relevant for non-Cyprus resident companies.

 
The measures

 
1. Increased rates of Special Defense Contribution: interest

The rate of Special defense contribution on interest is increased from 10% to 15% with immediate effect. Companies will generally be affected only with regard interest received on bank deposits. Other interest received (such as from loans etc) shall remain unaffected as their profit from interest should in most cases be subject to income tax at 10% and be exempt from Special Defense contribution.
 

2. Fixed annual duty for companies  

All companies (except for dormant and those not owning any assets) are required to pay an annual fixed duty of Euro 350 to the Registrar of Companies. This duty for 2011 is due by 31 December 2011 and for subsequent years by 30 June. With regard the year the company was incorporated, such fee shall not be applicable. Financial penalties of Euro 10% or 30% will be applicable for late payments within 2/5 months from the due date. In the event of non-payment or further delay then the Registrar may de-register the company. The fee for re-registering is Euro 500/750 depending on the circumstances.
 

3. Date the amendments shall enter into force

The above provisions are coming into force from the date of publishing of the law in the Official Gazette of the Republic of Cyprus (i.e. 31/08/11).