Cyprus Parliament approves NID tax law amendments

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June 2020

Overview

The Cyprus Parliament, on June 5, voted to amend certain Cyprus NID regime provisions. The amendments will become law following their publication in the Cyprus Gazette, which is expected to occur soon.

The annual NID rate amendments are applicable as of the start of the current tax year or calendar year (January 1, 2020). They include changes to the annual NID rate’s calculation and eliminating references to the Cyprus government bond’s yield as the minimum rate for the relevant portion of the NID rate calculation.

Other amendments relate to:

  • capitalization of reserves that existed prior to the NID regime’s 2015 introduction in Cyprus (applicable as of January 1, 2021) and
  • the income tax law language regarding the annual NID amount cap.

The takeaway

The amendments can be viewed as the final step for the Cyprus NID regime to receive official EU Code of Conduct approval, which will increase its appeal and competitiveness.

Eligible existing companies claiming NID should review their calculations for their 2020 annual NID amount in order to assess whether the amendments impact their annual NID amount within the upcoming July 31, 2020 deadline for submitting the 2020 provisional corporate income tax return and making the first 2020 provisional corporate income tax installment payment.

Companies that did not follow the original policy intent of ‘matching’ as set forth in the relevant CTA Circular and did not cap their annual NID amount on the basis of the ‘matching’ concept may need to consider how their prior-year filing positions may be impacted. Such companies should have declared their non-compliance with the relevant Circular upon submitting their corporate income tax return to the CTA.

Contact us

Geoff Jacobi

ITS, Knowledge Management Managing Director, PwC US

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