Cyprus: Legislative changes allowing settlement of overdue tax debts, VAT-related write-offs (COVID-19)
Relief allows taxpayers to settle overdue tax debts by reducing their turnover for 2020 by 25%
Relief allows taxpayers to settle overdue tax debts by reducing their turnover by 25%
Legislative amendments approved 29 April 2021 allow taxpayers to settle overdue tax debts by reducing their turnover for 2020 (compared against 2019) by 25%. Other legislative changes allow taxpayers to write off monetary and other penalties for value added tax (VAT) purposes.
The relief is offered in response to the coronavirus (COVID-19) pandemic.
Settlement of overdue tax debts
Tax debts eligible to be settled relief concern those for the period 1 January 2016 through 31 December 2019.
Taxpayers must apply for the relief, and the last day to apply is 29 April 2022 (12 months after the effective date of the law) and the deadline for submitting the related tax returns is 31 December 2021.
The ability to settle overdue tax debts does not extend to a new tax debt that may arise in the future even if it relates to the relevant period (e.g., following a tax assessment). This means that the eligible debts are the ones already declared by the taxpayer (or to be declared) by 31 December 2021.
There are special rules for unremitted tax installment payments not remitted within the period starting from 1 March 2020 through 31 December 2020.
Penalties write-off for March - July 2020
The amendments to the VAT law, also approved on 29 April 2021, allow taxpayers to write off monetary and other penalties (such as the penalty for failure to timely submit quarterly or monthly VAT returns) for periods from March through July 2020.
Read a May 2021 report prepared by the KPMG member firm in Cyprus
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