Cyprus - New measures implemented due to bailout

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Cyprus – bailoutA number of new austerity measures have been implemented by the Cyprus Government due to the requirement for bailout. The majority of proposals consist of structural changes and improvement of administrative affairs. The proposed catalogue of measures has not included increasing Corporate Tax and no new relevant taxes are planned (no capital gains tax on company income, no withholding tax etc.). Below is a brief summary of the proposed changes: Special Levy Tax for all Cyprus Companies:
From 2013 the Special Levy Tax of 350.00 Euro is applicable to all companies registered with the Cyprus Registrar of Companies.
The exemption for dormant companies is abolished
The maximum limit of 20,000.00 Euro is abolished
The levy will be payable from the year of incorporation.
Increase in VAT Rates:
From January 2013 the standard rate of VAT will be increased from 17% to 18%.
As from 13th January 2014 the standard VAT will be increased to 19% and the reduced rate will be increased from 8% to 9%.
Income Tax:
As from 1st January 2013 Companies and individuals with a turnover exceeding 70,000 Euro will be able to carry losses forward for 5 years.
Temporary Tax Rates:
From 2013 temporary tax must be paid in 2 instalments rather than 3 – 31st July and 31st December.
Increase in Social Insurance Fund Contributions:
From 2014 the percentage contribution to the Social Insurance Fund of employers and employees will be increased to 7.8%.
The contribution of self-employed individuals will be increased to 14.6%.
Increase in Special Contributions on salaries and pensions of employees in the private sector:
As from 2014 contributions from private sector employees will increase – exact details can be provided if required.
Retention of books and records:
From 1st January 2013 the retention of books and records will be decreased to 6 years.
Decrease of public interest rate:
As from 1st January 2013 the Public Interest Rate has been decreased from 5% to 4.75%.