In brief the main and important provisions of the Law are the following:
Obligation to submit personal income tax returns from 2020 onwards
From tax year 2020 onwards, all individuals receiving income (as defined in Article 5 of the Law – i.e salary, rents, dividends, interest, income from disposal of securities etc) are obliged to submit a personal income tax return (IR1 form) irrespective of the fact that such income could be less than €19.500 (tax-free threshold).
An exemption to the above rule would apply to certain categories of individuals with gross income not exceeding €19.500 (under conditions) and as per the provisions of the relevant Decree which is expected to be issued by the Tax Department at a later stage.
Deadlines for the submission of income tax returns and the payment of income tax for tax years 2020 onwards
The deadlines for the submission of income tax returns and the payment of income tax for tax years 2020 onwards are as follows:
|
Category of taxpayer
|
Tax Return type
|
Submission Deadline
|
Payment of Tax Deadline
|
|
Persons who do not prepare audited F/S
|
IR1
|
31 July of the year following the relevant tax year
|
31 July of the year following the relevant tax year
|
|
Persons and companies that prepare audited F/S
|
IRI / IR4
|
15 months from the end of the relevant tax year
|
1 August of the year following the relevant tax year
|
|
Employers return
|
IR7
|
31 May of the year following the year of report
|
N/A
|
Submission of revised income tax returns
Taxpayers are allowed submit a revised tax return for tax years 2020 onwards, within a period of 3 years from the submission deadline of the tax return and provided that the revision of the tax return will be done for correcting an error and be in compliance with the Law or for claiming a tax relief/credit. Note that a revised tax return cannot be submitted during the process of a tax examination by the Tax Office.
For tax years up to and including 2019, revised tax returns will only be accepted if they are submitted within 6 months from the date of entry into force of the amending law, i.e. up to 19 February 2021.
Powers of the Commissioner of Taxation
The Commissioner of Taxation has the power to request the submission of:
- tax returns and any supporting documentation in respect of those returns;
- a detailed statement of assets and liabilities (capital statement) of a taxpayer, his/her spouse and of any dependents, covering a period not exceeding 6 years. The period under review can be extended to 12 years in case of fraud or willful default.
Tax inspections
The Commissioner of Taxation has the authority to enter and inspect business premises at a reasonable time, without providing a notice to the relevant person.
Accepting payments through credit cards
As per a Decree to be issued at a later stage by the Tax Department, certain type of businesses, will not be allowed to refuse payment by credit card and as such they will need to have the appropriate equipment which will need to be properly licensed and approved by authorized credit card payment providers. From 21 February 2021, in case of non-compliance, an administrative fine of up to €2.000 will be imposed.
Obligations of Cyprus incorporated but non-Cyprus tax resident companies
Cyprus incorporated but non-Cyprus tax resident companies will have the obligation to inform the Commissioner of Taxation of the state of their business activities within 60 days of incorporation through a specific form to be issued.
No refund will be granted by the Government in case of non-compliance with VAT obligations
No tax refund will be paid until there is compliance with the filing of VAT returns for periods up to the end of the tax year during which the examination of the tax year of the refund was initiated.