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Indirect Tax Update - Liability to issue a legal receipt

Indirect Tax Update Liability to issue a legal receipt

On 20 December 2018, the Department of Taxation released Circular 228, providing further clarifications and suggestions regarding the obligation of taxable persons (hereinafter referred to as "tp") to issue legal receipts when supplying goods or providing services to non-taxable persons (hereinafter referred to as non-tp).



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Indirect Tax Update - Liability to issue a legal receipt
Indirect Tax Update - Liability to issue a legal receipt

Why the Circular?

In accordance with Paragraph 1A of the Schedule 10 of the VAT Act of 2000 (N95 (I) /2000) and Regulation 13A of the General Regulations, a taxable person supplying goods or services to non-taxable persons is obliged to issue a legal receipt. A related clarification circular was released on 13/1/2012 under number 161.

However, since it has been established that because of the nature of their activities, businesses involved in cash transactions such as school and mobile canteens, stands at fairs and exhibitions etc., find it difficult to issue legal receipts at the time of supplying the goods or services. The Department of Taxation through circular 228 suggests the following:

i. Taxable persons who are involved in such activities to issue preprinted receipts of a fixed value.

ii. These receipts are given to non-business customers at the time the transaction takes place or be affixed to the goods they supply.

iii. Preprinted receipts can be of a predetermined value such as €1, €2, €2.5 or €5 etc.

iv. The pre-determined value of the receipts depends on the type and value of the products available by the taxable person.

Example 1

A mobile canteen on a busy highway sells hot sandwiches and soft drinks, as well as, chocolates and crisps. Sandwich prices range from €2 to €4 and beverages between €2 and €3. Potatoes and chocolates cost €2.50.

The owner of this mobile canteen could print receipts worth €2, €2.50, €3, €4 or even multiples to cover larger orders e.g. five sandwiches of €3 = €15 to have a printed receipt of €15 or three of €5.

Management of preprinted receipts

The receipts should be in numbered blocks of the same value (e.g. 5 blocks of receipts of €1, 10 blocks of receipts of €2).

To contain the following information

- Identification number

- The name, address and registration number of the taxable person

- Description of the goods / services provided

- Total amount payable, including VAT

- The applicable VAT rate

In addition to the other records to be kept under Regulation 22 of the General Regulations, an additional record should be kept to record preprinted receipts on a daily basis or based on each event

- The serial numbers of the receipts used on a daily basis or in each event with a clear indication of the date

- Total collections

- The amount of VAT attributable to this collection

Failure to comply with the above preprinted receipts is not acceptable.

Example 2

A nut trader participates in various festivals. Prices for nuts marketed range from €2 to €6. He orders from a friend printed blocks of preprinted receipts of €1, €2, €3, €4, €5 and €0, 50c.

Each block contains 100 receipts and the numbering starts from 1-100 followed by 101 -200. The trader orders 2 blocks for each value, a total of 12 blocks.

During the Saint George fair, he uses a number of receipts from each block and collects the total amount of € 1,380.

The additional file that he keeps for preprinted receipts shall show the following details:

Fair at Saint George Church at Latsia (22-24 April 2018)

Value of receipt (€)


Receipts issued

Number of receipts issued

Amount collected (€)

Balance of receipts


1 (1-100)

2 (101-200)






1 (1-100)

2 (101-200)







1 (1-100)

2 (101-200)






1 (1-100)

2 (101-200)







1 (1-100)

2 (101-200)






1 (1-100)

2 (101-200)






1 (1-100)

2 (101-200)













VAT (5%)




How can KPMG assist?

Should you like to further discuss the content and potential impact of the Circular to your business, please contact one of our trusted advisors from the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.

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