Procedure for Settlement of Taxes in Arrears in Cyprus

12 July 2017
 
Procedure for Settlement of Taxes in Arrears in Cyprus
On 23 June 2017, the Tax Commissioner issued a notification on how to implement the law on the procedure for settling tax arrears.
 

1. Introduction

 
In February 2017, the House of Representatives of Cyprus passed a law on the procedure for settling tax arrears, which covers the following taxes:

1. Income tax
2. Special contribution for the defense
3. Immovable property tax
4. Capital gains tax
5. Inheritance tax
6. Special contribution for employed, retired and self-employed in the private sector
7. Special contribution for refugees
8. Stamp duties
9. Value Added Tax

 
On 23 June 2017, the Tax Commissioner issued a notification on how to implement the relevant law, the main provisions of which are set out below.
 

2. Submission of application for regulation

 
An application for inclusion in a regulatory plan must be submitted within three months from the effective date of the law, which is 3 July 2017 (ie by 2 October 2017) via a specific website application. Both the Tax Commissioner's decision and the debtor's statement of acceptance are made through the website application.
 

3. Tax liabilities subject to regulation

 
This regulation relates to the following tax liabilities:
 

1. All taxes in arrears up to and including 31 December 2015 which at the date of the application have been assessed by the Tax Department of Taxation and appear as payable, irrespective of the manner in which they are repaid either by agreement with the Tax Department or pursuant court order. 
2. Amounts which become payable as a result of the submission of a self-assessment in respect of tax years up to 31 December 2015 where the tax returns for the relevant tax year have already been submitted by 3 July 2017, but without payment of the tax due.
3. Tax liabilities which are assessed after 3 July 2017 by the Tax Commissioner relating to tax years until 31 December 2015. In such a case, an application for regulation shall be made within three months from the date on which the tax becomes payable, on the basis of the tax assessment which has been issued.

 

4. No. of monthly installments and percentage of exemption

 
Overdue taxes may be subject to the exemption of a percentage of penalties and interest due to non-payment of taxes due as follows:
 
Monthly installments                                                                         (%) of exemption

1. one off payment                                                                                 95%.
2. from 2 to 8                                                                                          90%.
3. from 9 to 15                                                                                        85%
4. from 16 to 21                                                                                      80%
5. from 22 to 28                                                                                      75%.
6. from 29 to 35                                                                                      70%
7. from 36 to 42                                                                                      65%
8. from 43 to 49                                                                                      60%
9. from 50 to 56                                                                                      55%
10. 55from 57 to 60                                                                                  50%

 
Payment of the agreed installments is made to financial institutions.
 

5. Various other provisions

 

1. Tax liabilities subject to regulation are no longer subject to penalties or interest for late payment, which is otherwise provided under the relevant legislation.
2. The regulation is terminated in specific cases of non-compliance by the taxpayer with his obligations set out in the notification, resulting in the obligatory immediate settlement of the outstanding balance of the tax liabilities. 
3. Where criminal proceedings against a taxpayer are pending before the court and the taxpayer applies for a regulation which is approved, the proceedings are suspended. 

Printable Version =>