New Tax Incentives

The President of Cyprus has announced new incentives and other measures to restart the economy. The President stressed that the tax incentives result from studies and include:

– for the employment of an additional person, a deduction equal to 25% on labor costs from taxable income

– a tax deduction of 100%, until 2016, relating to expenditure on the acquisition of fixed assets related to innovation, research, computing, communications and renewable energy.

– extension of increased tax deduction with a minimum of 20% for acquisition of other assets by 2016

He noted that within the next few days an announcement will be made relating to incentives for capital repatriation and that profits which are reinvested in the business will be exempt from the deemed distribution of dividends.

He stressed that the government has a complete understanding and awareness of the difficulties faced and the additional difficulties that have arisen due to the banking system. The government, he said, has designed tax relief in relation to VAT, relieving taxpayers of interest and charges on those occasions where one could not pay the VAT for the months of April, May and June 2013.

Any additional VAT payable will be reduced from 10% to 5% for the months of July to October 2013, provided that the tax will be paid by December 2013 and that for all VAT in 2013 there will be a reduction in the surcharge from 10% to 5%.

Moreover beyond the measures announced, after coordinated efforts with the Ministry of Finance and the Central Bank, many restrictions on trade, including many restrictions on international business have been lifted and the government is continuing in every direction with the aim of creating the right conditions to remove all restrictions on financial transactions.

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