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Tag: #Cyprus

Cyprus Imposes 19% VAT on Building Land

Published: Olena Kamenetska | 19/01/2018 | news

From January 2, 2018 in Cyprus, the new VAT Law has entered into force, providing for changes in the main VAT Law No.95(I)/2000. The document introduces VAT at a standard rate for the sale of building land, as well as leasing/rental of business premises on the conditions specified in the law. It also introduces the reverse charge mechanism for VAT-subject supplies of land and property under a loan restructuring/force-sale arrangement, which will mostly influence financial institutions. Imposition of VAT at the standard rate of 19% on building land The standard VAT rate of 19% will be applied in the following cases: transfer of ownership; transfer of indivisible land portion; transfer of ownership via contract or sale agreement or agreement which specifies that the ownership will be transferred in the future or leasing agreement with buyout option. The above shall apply to non-developed building land which is meant for the construction of one or more structures in the course of carrying out a business activity. More clarifications are still needed for the application of the law, such as the circumstances whereby a transfer is not considered to be a part of a person’s...

Ministry of Finance Reforms Institution of Financial Liability for Tax Violations

Published: Rolan Bondarets | 30/11/2017 | news

Recently the Ministry of Finances of Ukraine, together with the experts from the interactive tax platform TaxLink, has developed a bill “On Amendments to the Tax Code of Ukraine regarding the improvement of the prosecution system for violation of tax laws”. The essence of the document is to reform the liability for tax violations provided by the current legislation. First of all, the bill introduces more effective mechanisms for the settlement of tax disputes in cases when the violation of tax law happened not due to the fault of the payer. In addition, it is proposed to introduce the principle of fault liability of taxpayers which is inherent in all branches of Ukrainian legislation, in contrast to the current liability of the payer without fault. Therefore, the last one will be considered guilty if found guilty that he was able to comply with the relevant rules and regulations, but did not take the necessary measures for this. In this regard, when considering the verification materials by the supervisory authority, the documents of the taxpayer may be subject to the examination that show his due diligence. Another significant innovation is the introduction of the system of...

Amendments to the intellectual property regime in the Republic of Cyprus

Published: Sergey Panov | 26/10/2016 | blog
Cyprus - Flag

October 14, 2016 in order to bring legislation into line with the BEPS requirements (plan to counter the erosion of the tax base and output gains from taxation), the Government of the Republic of Cyprus passed a law that introduces a number of amendments to existing intellectual property regime (hereinafter - the EC). These amendments to the IP regime came into force on 07.01.2016 year. It should be noted that until now existed in Cyprus IP regime has not been approved by the majority of EU member states, as well as been widely criticized. So, focus on the main points of the IP regime change which, in our view, require attention. First, once it is worth to note that the tax rate for the use of intellectual property (hereinafter - IS) unchanged at 2.5%. To determine the qualifying EC introduced a modified factor relation criterion (modified nexus approach). According to this criterion, the definition of qualifying IP narrowed. This factor suggests a link between the cost of the development of IP, most IP and income produced by the IP data objects. In this approach, the taxpayer must itself carry out research and development work (hereinafter - R & D). In addition, a special...

Future changes in the Convention between Ukraine and Cyprus on avoidance of double taxation

Published: Sergey Panov | 29/09/2016 | blog
Park in Cyprus

The Ukrainian parliament is currently being finalized for submission to the discussion of the draft law on ratification of the Protocol amending the Convention between the Government of Ukraine and the Government of the Republic of Cyprus for the avoidance of double taxation and prevention of tax evasion on income tax. This Protocol provides for changes in the taxation of dividends, interest on loans, as well as the alienation of the property income. With regard to dividends, the top rate will be reduced from 15 to 10%. But lower tax rate - 5% survive only if ownership of at least 20% of the capital of a legal entity. But how exactly a person - remains a mystery, as in the original text of the Protocol stated "Partnership About", ie the "Partnership", while the bill "Partnership About" translated as "Society". As such, this provision leaves room for corruption because it allows you to abuse the tax authority in determining the rate that must be applied by the payer. The rate of taxation of interest on loans increased from 2% to 5%. Changes are also proposed concerning the taxation of income from the alienation of shares and corporate rights. Unfortunately, due to the...

The agreement on the avoidance of double taxation changes, Ukraine – Cyprus

Published: Sergey Panov | 06/04/2016 | news

The Ukrainian government has announced a change to the existing agreements on avoidance of double taxation signed with Cyprus. The revised text will close a loophole that led to the fact that the income from immovable property situated in Ukraine avoid taxation in Ukraine. Income derived by a Cyprus resident from the sale of shares or other corporate rights will be subject to taxation in Ukraine if more than 50 percent of this revenue is directly or indirectly related to income immovable property situated on the territory of Ukraine. The minimum rate on dividends is increased from two percent to five percent. This low rate is used when the recipient owns 20 or more percent of the company distributing dividends and investment at least EUR 100,000 to obtain holding. The tax rate of ten percent is used otherwise. The revised section on dividends will come into effect not earlier than 1 January 2019. Other changes proposed to bring in agreement with the latest international tax standards developed by the Organization for Economic Cooperation and Development. The amendment has been sent to the Ukrainian legislators for approval. Author: Sergey...

Corporate Tax Rate 2016

Published: Sergey Panov | 17/03/2016 | news
Corporate tax in 2016

UK - The Corporation Tax main rate for 1 April 2016 is set at 20%. This rate will fall to 19% for the year beginning 1 April 2017, and to 18% for the year beginning 1 April 2020. Hong Kong - Profits tax levied at rate of 16,5% for companies carrying on business in Hong Kong (and 15% for unincorporated businesses) on relevant income earned in or derived from Hong Kong. Ireland - Standard corporation tax rate on trading income is 12,5% and 25% on non-trading income. Cyprus - Corporate tax rate is 12,5%. Certain types of income subject to Special Contribution for Defense at rates of 17%(dividends), 30%(interest) and 3%(rents). Latvia – Rate is 15%. Belize - All non-CARICOM residents, who have any taxable receipts originating from Belize, or in respect of any service provided in Belize, are required to pay business taxes as follows: Dividends - 15%, Insurance Premiums - 25%, Interest on Loans - 15%, Management fees - 25%, Rental of plant and equipment - 25%, Technical Services - 25%. British Virgin Islands - No income tax. United Arab Emirates - Income tax decrees currently enforced on oil and gas companies and branches of foreign banks. Oil and gas...

Double tax treaty between Cyprus and Switzerland

Published: Sergey Panov | 01/03/2016 | news
Cyprus and Switzerland

The first Cyprus-Switzerland double tax treaty (DTT), signed in 2014, entered into force in October 2015 with its provisions taking effect as from January 1, 2016. Under the treaty there is no withholding tax (WHT) on interest and royalties. There is also no WHT on dividends in those cases where the beneficial owner of the dividends is: a company (other than a partnership), the capital of which is wholly or partly divided into shares, holding directly at least 10% of the capital of the company paying the dividends for an uninterrupted period of at least one year (the time period criterion may be satisfied post the date of the dividend payment), or a pension fund or similar institution recognized as such for tax purposes, or the government, a political subdivision, local authority, or the central bank of one of the two Contracting States. Per the treaty, a 15% WHT on dividends applies in all other cases. Irrespective of this, per the provisions of Cyprus’ domestic tax legislation, Cyprus does not apply WHT on dividend payments out of Cyprus at all times. Author: Sergey Panovmanaging partner Finance Business...