Important Tax Changes Introduced by Cyprus
Introduction
Tax Changes by Cyprus: In order to facilitate the purpose of simplification and improvement of the Cyprus Tax System in line with compliance regulations, the House of Representatives has passed new bills which have been converted to new laws on 9th July 2015. New bills are also to be reviewed and expected to be approved in due course.
Tax Changes by Cyprus: Below are the main aims of the amendments of new bills:
- Simplification and Harmonization of the Cyprus tax system with European Guidelines.
- Making Cyprus company more appealing and strengthening position in international tax planning.
- Making Cyprus a more attractive destination choice for persons who wish to invest in Cyprus property.
The main tax changes, now into Laws:
(A) Income Tax
Deduction on Notional Interest on equity introduced
This will apply as beginning of year 2015, where companies will be entitled to deduction on notional interest on equity as in funds or payments introduced into the Company’s share capital after the beginning of the year 2015, which has already been paid and used for company operations. Please note also that Cyprus corporate tax is one of the lowest in the EU. For more information please follow this link: Cyprus corporate tax rates.
(B) Property Taxes
Tax exemption on New Capital Gains
20% capital gains tax will not apply on future Cypriot situated property sales if such property is purchased between date law is effective and end of year 2016.
Reduction on Land Registry Fees
50% reduction on the land transfer fees for properties transferred until end of year 2016
(C) Defence Tax Related
Defence tax does not apply to non-domiciled persons
Defence tax was applied on physical persons who were Cyprus tax residents in various ways.
‘Non-domiciled’ persons concept is introduced with the new amendments meaning that individuals who are NOT DOMICILED in Cyprus, and irrespective of whether they are tax residents in Cyprus, will not be subject to defence tax.