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Family Businesses’ Challenges and Recent Changes in the VAT Legislation

Family Businesses’ Challenges and Changes in the VAT

KPMG in Cyprus organized and delivered with great success the seminar entitled “Family Businesses’ Challenges and Recent Changes in the VAT Legislation"


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KPMG in Cyprus organized and delivered with great success the seminar entitled “Family Businesses’ Challenges and Recent Changes in the VAT Legislation", which was held at the Paralimni Town Hall on the 17th of November 2017. The keynote speakers were Mr. Demetris Vakis, Board Member of KPMG in Cyprus and Head of Family Business and Mr. Harry Charalambous, Board Member of KPMG in Cyprus and Head of Indirect Tax.

Mr. Paris Theophanous, Board Member of KPMG in Cyprus based at the Firm’s Paralimni branch, welcomed the attendees stating: “KPMG in Cyprus remains close to family businesses and as a matter of fact, this is proven in practice by organizing this seminar. We promise that we will continue to inform our customers, partners and the market in general, regarding issues of their concern”.

After analyzing the advantages and disadvantages encountered by most family businesses in Cyprus, Mr. Vakis’ presentation focused on the challenges they face, while presenting KPMG’s approach for achieving real business success. It is worth noting that the issue of succession and smooth transition to the new generation has aroused the most interest. Mr. Vakis said among others: “The survey’s findings demonstrated that there are several obstacles hampering the way of family businesses towards growth, threatening their survival beyond the third generation. Careful planning is required to ensure a smooth transition of the leadership to the next generation”.

Mr. Charalambous’ presentation that followed, analyzed in detail the recent changes to the VAT legislation and addressed many of the concerns raised. Among others, Mr. Charalambous adequately explained the legislation with regards to the imposition of VAT on transfers of undeveloped building land in the course of exercising an economic activity and on the leases of real estate property to persons carrying out taxable activities. In addition, he analyzed the recent changes to the 5% reduced VAT rate for the  acquisition or construction of permanent residence, overdue debts, expected changes to the tour operators margin scheme supplies, appeals to the Tax Board and information on restructuring or seizure of real estate property by financial institutions Mr. Charalambous said among others: “The imposition of VAT on property leases enables property owners to claim input tax. In case an individual does not benefit from input VAT recovery, he/she can request the Commissioner to opt out from his liability to impose VAT on rentals”.

The seminar’s participants included active executives coming from various industries such as tourism, hotels, real estate, etc.

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