Date: 10/04/20

This note aims at drawing the attention of taxpayers in relation to the correctness of their  economic activity code as well as to a decree that has been issued by the Minister of Finance regarding the payment of excise duties.

Α. Economic activity Code (EAC)

It has been observed that the EAC of some taxpayers as shown on the VAT registration certificate issued before November 2009 may no longer apply as it is not in line with the new codes adopted by the VAT Department under NACE 2. (European Classification of Economic Activities).

For example, the registration certificate may refer to activity code 72009 which has now been changed to code 61901 and refers to telecommunications. Prior to the revised version of NACE 2, code 61901 corresponded to code 064202.

In the above example, if the taxpayer is relying on the EAC of the registration certificate, he might consider that his business does not fall within the exemptions provided for by the amending law and as a result he will not pay the VAT due on time eg. instead of the VAT due for the tax period ending 29 February to be paid on 10 April to be paid on 10 November and thus be exposed to additional charges.

Therefore, if the registration certificate was issued before November 2009 it is recommended that businesses confirm their business code with the Tax Department by contacting the following telephone numbers: 22404615, 22404610, 22404609 and 22404677.

B. Extension of payment of excise duty (ED)

Pursuant to Article 5 of the Consumer Tax Act 2004 (91 (I) / 2004), the tax on energy products, tobacco products, alcohol and alcoholic beverages becomes chargeable at the time of consumption of the products concerned. Paragraph (5) of the same Article enables the Director to grant deferral of the payment of ED by companies whose turnover exceeds € 3.5 million for a specified period of time under the terms and conditions set out in a notification.

Due to the current Covid 19 crisis, on 30 March a decree was published in the official Government Gazette pursuant to Article 5 (5) which provides that the Minister may decide, upon request by the taxpayer, to extend the deadline in the event of an emergency in times of crisis by 60 days beyond the stipulated 16 days of the end of the relevant calendar month.

This means that if the Minister's decision concerns March, the payment deadline will be extended from 16 April to 16 June. Similarly, if this decision concerns April, the payment deadline will be extended from 16 May to 16 July.

It is emphasized that due to the extension of payment time and hence the amounts of ED due, it may be possible to apply for a supplementary guarantee in addition to the existing guarantee. The extension will apply only to companies that pay the ED through the computerized Theseus system and the production, acquisition and import of such goods is not occasional.

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.