As part of the agreement concluded with the European Stability Mechanism and the International Monetary Fund for financial assistance, the Cypriot House of Representatives approved a number of tax law amendments on the 18th of April 2013.
The numerous advantages which Cyprus holding have over competing jurisdictions, such as the tax free flow of dividends through Cyprus and the beneficial exit opportunities offered through Cyprus’s favourable national tax legislation and the wide network of double tax agreements, remain intact.
The tax amendments passed include:
(i) Annual levy on bank deposits
With effect from 1 January 2013 the levy payable by banks on customer deposits has been increased from 0.11% to 0.15%. No levy is however payable on inter-bank deposits;
(ii) Increase in the corporate tax rate
With effect from 1 January 2013 the corporate tax rate has been increased from 10% to 12.5%.
Despite the increase in the tax rate, Cyprus’s corporate tax rate remains one of the lowest in the EU and the increase does not affect most holding companies.
(iii) Increase in special contribution for defence on interest
The rate of special contribution for defence has been increased from 15 percent to 30 percent, subject to certain exceptions, effective upon publication of the legislation in the Government Gazette. It should be noted that this tax is payable only by tax residents of Cyprus; non-resident individuals and companies are completely exempt.
(iv) a freeze in promotions for public sector employees.
Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.