M. Target Group would like to inform of the following special measures announced by the Cyprus Government in order to support the country’s economy affected by the Coronavirus outbreak:
I. Tax measures
- A two-month extension of the submission deadline of income tax returns that were due by 31 March 2020. The new submission deadline for the 2018 corporate income tax returns (IR4) and for the 2018 personal income tax returns (IR1) of individuals preparing audited financial statements is 31 May 2020.
- A two-month postponement of the increase in contributions (effective from March 2020) to the General Healthcare System by employers, employees and the State.
- Special arrangements that will support taxpayers who have been included in the scheme regulating the Settlement of Overdue Taxes.
II. VAT measures
Temporary suspension for two months of the obligation for payment of the VAT liability without imposition of penalties as a measure to enhance liquidity for businesses. 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%.
It is noted that relevant arrangements will be made for the VAT liability to be paid gradually until 11 November 2020.
Temporary reduction of the VAT rates as follows:
- Standard VAT rate: from 19% to 17% for a period of two months; and
- Reduced VAT rate: from 9% to 7% for a period of 3,5 months.
The reduction of the rates will be applicable immediately following the voting of the relevant bill by the House of Representatives.
The deadlines for submission of VAT returns are not affected.
M. Target tax specialists remain at your disposal for any clarifications regarding the correct implementation of the above measures as well as any other tax-related queries.