The Law Regulating Overdue Taxes
On the 27th January 2017, the Cyprus Parliament voted the Law Regulating Overdue Taxes, giving people the opportunity to repay overdue taxes in monthly instalments.
After several discussions, postponements and amendments to the proposed tax bill, this well-balanced outcome is expected to generate substantial and immediate state revenues.
The good news for the tax payers is that by utilizing the provisions of the specific Law, penalties, interest and monetary charges imposed on overdue taxes may be minimized or even eliminated.
The law concerns specific arrangement for overdue taxes under:
- the Income Tax Law;
- the VAT;
- the Special Contribution for the Defence of the Republic Law;
- the Capital Gains Tax Law;
- the Deceased Persons Estate (Taxation Regulations) Law;
- the Immovable Property Tax Law;
- the Special Contribution of employees, pensioners and self employed persons of the private sector Law;
- the Special Contribution of officials, employees and pensioners of the state and the wider state section Law; and
- the Stamp Duty Law.
One-off settlement of outstanding taxes
Tax payers that will elect to settle the entire amount with a one-off payment, will be exempt from the obligation to pay any penalties, interest and monetary charges imposed on overdue taxes.
Settlement of outstanding taxes in multiple installments
Tax payers also have the option to settle their tax liabilities in multiple instalments.
The Law provides for maximum monthly instalments and minimum amount per each instalment, depending on the amount due:
- Outstanding taxes up to EUR 100.000 may be settled in 54 equal monthly instalments (maximum). Minimum amount per each instalment is EUR 50.
- Outstanding taxes over EUR 100.000 may be settled in 60 equal monthly instalments (maximum). Minimum amount per each instalment is EUR 1.852.
The law also allows the tax commissioner the authority to decide on discounts, interest, and charges on a case by case basis.
Persons found having undeclared revenue, deposits or transactions executed either in Cyprus or abroad, are exempt from the provisions of the specific Law. This applies for both legal entities and individuals.
Applications must be submitted within three months from the date that the Law will come into effect.