Date: 6 May 2021

On 29 April 2021 the House of Representatives of the Republic of Cyprus voted an amendment of the existing law (N4(I)/2017), enabling taxpayers to submit an application for settlement of overdue tax debts. Basic condition consists the reduction by at least twenty five percent (25%) of their turnover for the year 2020, compared to the year 2019, as a result of the restrictive measures taken to deal with the pandemic Covid-19.

Debts covered by the relevant amendment concern the period from 1st of January 2016 to 31st of December 2019.

The final date of applying for the payment arrangement plan is 29/4/2022 (12 months after the date when the Law was entered into force) and the deadline for submitting the tax returns is 31/12/2021.

It is noted that, the right for settlement of overdue debts is not extended to each new tax debt which might be created in the future and relates to the relevant period, e.g. following a tax assessment. This means that the debts covered are the ones already declared or to be declared by 31/12/2021 by the taxpayer. 

Based on the same amendment, any installments not paid within the period starting from 1st of March 2020 and ending on 31st of December 2020 will not be taken into account in the five cumulatively omitted installments on the basis of which the settlement plan is automatically cancelled. This refers to overdue debt settlement plan which was created up to 31st of December 2015, according to the existing plan.

Penalties write off for March - July 2020

On 29/4/2021 the House of Representatives also voted for an amendment of the CY VAT Act, for the purpose of writing off monetary and other penalties, as follows:

       a. €51 for the non-timely submission of quarterly VAT returns, with submission deadlines on 10/4/2020, 10/5/2020 and 10/6/2020

       b. €51 for the non-timely submission of monthly VAT returns, with submission deadlines on 27/4/2020, 27/5/2020, 27/6/2020 and 27/7/2020

       c. 10% penalty on the payable VAT amount concerning the above quarterly and monthly VAT periods

       d. €50 for the non-timely submission of Recapitulative Statements (VIES), for the periods ending 31/3/2020, 30/4/2020 and 31/5/2020

 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.