In light of the business disruption caused by COVID-19 all over the world, the Cyprus Government announced on 15 March 2020 a series of measures in order to support the country’s economy. They include amongst others tax and VAT measures that will enable the taxpayers to survive within this period.
The measures announced with tax and vat implications are as follows:
Tax related measures:
• Extension of the submission deadline of income tax returns for the year 2018 both for companies and individuals preparing audited financial statements. The deadline of 31 March 2020 was extended by two months thus the new submission deadline is moved to 31 May 2020.
• Non-payment, for a period of two months, of the increase in contributions (effective from 1 March 2020) to the General Healthcare System (GHS) by employers, employees and the State.
• Special arrangements will be made for taxpayers who have been included in the scheme for regulating the Settlement of Overdue Taxes up to year 2015.
Vat related measures:
• Temporary reduction of the VAT rates from 19% to 17% (standard VAT rate) and from 9% to 7% (reduced VAT rate) for a period of two months; and for a period of 3,5 months; respectively. The reduction of the rates will be applicable immediately after the voting of the relevant legislation by the House of Representatives.
• Temporary suspension for two months of the obligation for payment of the VAT liability without imposition of penalties. However, this measure applies to businesses with turnover not exceeding €1 million based on the turnover of the VAT returns that were submitted during 2019, and businesses whose turnover has been reduced by more than 25%. Relevant arrangements will be made for the VAT liability of the said period to be paid gradually until 11 November 2020.
• Special arrangements will be made for taxpayers who have been included in the scheme for regulating the Settlement of Overdue Taxes up to year 2015.