Amendments to the Assessment and Collection of Taxes Law

December 23, 2020

On 20 August 2020, an amending law was published in the Official Gazette in respect to the Assessment and Collection of Taxes Law, which was followed by a clarifying Circular (Circular 46), published by the Department of Taxation on 28 August 2020.

The main provisions of the amending law are highlighted below:

Obligation to submit personal income tax returns from 2020 onwards:

From the tax year 2020 onwards, all individuals with a gross income, as described in Article 5 of the Income Tax Law are obliged to submit a personal income tax return. Such income includes, amongst others, dividends and interest.

It is noted that as of 2019, individuals with gross income not exceeding €19.500 were not obliged to submit a personal income tax return, unless this was requested.

With the new provisions, from 2020 onwards, individuals with gross income not exceeding €19.500 will need to meet certain conditions to be exempt from the obligation to submit a personal income tax return. Further clarifications on this matter are expected to be announced.

The deadlines for the submission of income tax returns and the payment of income tax for tax years 2020 onwards:

For tax years beginning 1 January 2020, the due filing date for individuals, whether filing electronically or otherwise, and the due payment date is 31 July of the year following the tax year.
For individuals and companies who are obliged to file tax returns based on audited financial statements, the due filing date is 15 months from the relevant tax year end (e.g. for the tax year 2020, the due filing date is 31 March 2022) and the due payment date is 1 August of the year following the relevant tax year.

Submission of revised income tax returns:

Taxpayers can now submit a revised tax return for tax years 2020 onwards, within 3 years from the submission deadline of the relevant tax return, in the following cases:

• due to claiming a relief, deduction or tax credit; or
• due to correcting an error; or
• for the purposes of being consistent with the provisions of the tax laws.

It is noted that a revised tax return cannot be submitted during a tax examination or a tax audit of the relevant tax return.

A taxpayer must settle any tax liability arising from the revision, within 30 days from the submission of the revised return.

For tax years up to and including 2019, revised tax returns for which the submission deadline has passed, will be accepted by the Tax Department if they are submitted within 6 months from the date of entry into force of the amending law, i.e. up to 19 February 2021.

Change of taxpayer’s data:

The Tax Department needs to be notified within 60 days of possible changes to the taxpayer’s information.

Employer’s returns:

The deadline for the electronic submission of the Employer’s return (TD7) is amended from the 31st of July of the year following the relevant tax year, to the 31st of May of the year following the relevant tax year.

Obligations of Cyprus incorporated but non-Cyprus tax resident companies:

A Cyprus incorporated company that is not a tax resident of Cyprus, must inform the Tax Department of its intended activities in Cyprus within 60 days from its incorporation date.
In addition, such companies have an obligation to submit an annual tax return, 15 months following the end of the tax year.

Accepting payments through credit cards:

Certain businesses, that will be determined in a Decree to be issued by the Council of Ministers with reference to their businesses Code of Economic activity, will not be allowed to refuse payment by credit card. To meet this requirement, they would need to have the appropriate equipment, made available from licensed credit card payment providers. In case of non-compliance, an administrative fine of up to €2.000 will be imposed.

Transactions undertaken using credit cards or other electronic means of payment will participate in a public lottery and the winners will be rewarded with cash or in-kind prizes.

No refund in case of non- compliance with VAT obligations:

The refund of any tax will be suspended if the taxpayer has not submitted any VAT return due by the end of the tax year in which the examination for the refund began, until the taxpayer complies with this obligation.