Warning: Creating default object from empty value in /home/ppauditcom/public_html/components/com_k2/models/item.php on line 494

Tax Update - January 2013

Tuesday, 15 January 2013 13:29

TAX UPDATE

 

1.    VALUE ADDED TAX (VAT)

As from 14 January 2013, the standard VAT rate increased from 17% to 18%.

As from 14 January 2014, the standard VAT rate increases from 18% to 19%. In addition, as from 14 January 2014 the reduced VAT rate (applies to services offered by hotels and restaurants) increases from 8% to 9%.

According to a notification by the VAT Registrar, taxable persons which are affected by the change of the standard rate must, after the close of business on 13 January 2013, make an inventory count of the stocks of the company, make a record of the inventory count and keep it for a period of six years.

 

2.    CARRY FORWARD OF TAXABLE LOSSES

Restriction to carry forward taxable losses incurred for a period of five years after the year in which they were incurred to be offset against taxable income. Previously there was no such time limitation.

 

3.    CAPITAL ALLOWANCES

Machinery and equipment acquired during the fiscal years 2012, 2013 and 2014 are granted capital allowances at a rate of twenty percent (20%) (except for items which are granted a higher annual capital allowance rate).

Industrial and hotel buildings acquired during fiscal years 2012, 2013 and 2014 are granted capital allowances at a rate of seven percent (7%).

 

4.    ANNUAL LEVY TO REGISTRAR OF COMPANIES

From 2013, the annual levy of €350 will be paid by all companies registered at the Registrar of Companies without any exemption.

All exemptions from the compulsory payment of the annual levy are eliminated. These exemptions related to companies that were dormant or had no assets or had property in the Turkish occupied area.

Moreover, companies are also required to pay the levy on the first year of incorporation.

 

5.    SPECIAL CONTRIBUTION IN THE PRIVATE SECTOR

 

Each employee, self-employed, or person operating in the private sector receiving a pension, shall pay a special contribution to the Republic from 1 January 2012 until 31 December 2016 in order to strengthen public finances. The contribution is a percentage levied on the gross earnings as shown in the table below.

 

Special contribution 2012-2013

Special contribution 2014-2016

Gross Monthly Salary

Special contribution rate

Gross Monthly Salary

Special contribution rate

Up to 2.500

Nil

Up to 1.500

Nil

2.501 – 3.500

2,5 (with a minimum amount of special contribution of €10)

1.501 – 2.500

2,5 (with a minimum amount of special contribution of €10)

3.501 – 4.500

3

2.501 – 3.500

3

4.501and over

3,5

3.501and over

3,5

In the case of an employee, the payment of the special contribution is shared equally by the employer and the employee. (i.e.50% of the special contribution is paid by the employee and 50% is paid by the employer). 

 

6.    BANK LEVY PAYABLE BY FINANCIAL INSTITUTIONS

The bank levy payable by financial institutions based on their deposits is increased from 0,095% to 0,011% and the provisions are extended indefinitely.

 

7.    SOCIAL INSURANCE CONTRIBUTIONS

As from 1 January 2014, the rate of social insurance contributions for employers and employees increases from 6,8% to 7,8%.

 

Nicosia, 9 January 2013

Download article in PDF

Last modified on Wednesday, 16 January 2013 07:14