Measures relating to Tax and VAT taken by the Cypriot government in response to COVID-19
In response to the COVID-19 outbreak that has been spreading worldwide, including Cyprus, the Cypriot government announced a set of measures (as part of a national fiscal package) aimed at preserving as much as possible the Cypriot economy, including the following VAT and tax related measures:
1. A temporary suspension for two months of the obligation to pay VAT
, without the imposition of any penalty, as a measure to enhance liquidity for businesses, for:
Businesses with a turnover of not more than €1 million, according to the turnover of the VAT returns filed during 2019; and
Businesses the turnover of which has been reduced by more than 25%.
It is noted that arrangements will be made for the VAT due to be paid progressively by 11 November 2020.
2. A temporary reduction of the VAT rates
With respect to the standard VAT rate: from 19% to 17% for a period of 2 months; and
With respect to the reduced VAT rate: from 9% to 7% for a period of 3.5 months.
The reduced VAT rates will be applicable immediately following the approval of the relevant bill by the House of Representatives.
An extension of two months of the deadline of submission of the income tax returns, which were due by 31 March 2020
. The new deadline is 31 May 2020. This applies to the submission of the following income tax returns:
1. Corporate income tax returns (TD.4s) for the year 2018; and
2. Personal income tax returns (TD.1s) for the year 2018 for individuals preparing audited financial statements.