Cyprus Special Contribution for the Defence to be Cancelled for Foreign Investors and Companies
Who pay Special Contribution for the Defence in Cyprus? On which kind of income or revenues is it paid?
Special contribution for the defence is levied by the Special Contribution for the Defence of Cyprus (Law No. 117(I) of 2002 , as amended) on any income, such as interest on deposits, as stipulated below, which is earned by physical persons and legal entities such as companies resident in Cyprus. A physical person or is tax resident in Cyprus, if he/she resides in Cyprus for a period which exceeds 183 days in the year. A legal entity such as a company is tax resident in Cyprus, if its management and control are exercised in Cyprus. The revenues upon which it is imposed are dividends, interest on cash deposits, rents and the taxable income of public corporate bodies.
The Cyprus Government has announce recently that it is contemplating the cancellation of this contribution (tax), for foreign individuals and companies. A bill is being prepared and will be presented to the house of parliament for approval soon.
This would be a sizeable perk to foreign investors who are already operating in Cyprus or are thinking of doing so, and in any case it would help the Cyprus economy rev up a bit more.