Tax Structure Cyprus

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TAXATIONSTRUCTURE

OF

CYPRUS

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y Capital of Cyprus isNICOSIA.

y It got independencefrom united kingdom in1959.

y President of Cyprus isD.imitrisChristofias.

y Finance minister isCharilaos G.Stavrakis.

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TAXATION IN CYPRUS

y The tax system in Cyprus is progressive. In other words, the

higher your income, the higher the rate at which you will pay tax.

In 2009 the tax rates for an individual are 20% - 30%.

y There is a reduced rate and/or exemptions that are granted for

certain forms of income.

y Residents are subject to defence contribution for passive income,

e.g. rental, dividends etc. the rates are 3%-15%.

y Non residents are exempt from this tax

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TAX SLABS

TAX TAX BASE(EURO)

O UPTO 19500

20% 19501-28000

25% 28001-36300

30% 36,301 and over

Cyprus Individual income tax rates 2009

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INCOME TAX FOR INDIVIDUAL

y An individual is liable for tax on his income as an employee and on

income as a self-employed person.

y

Tax will be payable on income earned in Cyprus and overseas butexcepting a salary received overseas by an individual who meets the test

of a "permanent resident" of Cyprus.

y To be considered a resident of Cyprus, residence of at least 183 days in

Cyprus during any calendar tax year must be established or a life that is

centered in Cyprus.

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y An employer is obligated to deduct, immediately, each

month, the amount of tax and national insurance due from

a salaried worker.y A self-employed individual is obligated to make advance

payments on income tax that will be offset on filing an

annual report. The advance payments are made in three

equal payments.

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CYPRUS CORPORATE TAX

y Basic tax rate is 10%

y The tax rate for semi-

government bodies is 25%.

y Shipping companies sailingunder Cyprus flag pay zero tax

on profits and dividend paid.

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y 10% tax to be applied to both off shore and on shorecompanies

+plus a 2% levy on wage bills

Cyprus imposes corporation tax on 'companies'

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y Profits from activities of a permanent establishmentsituated outside Cyprus are completely exempt.

This exemption will not apply to a Cyprus company if-:

1) Its foreign permanent establishment directly or indirectly

engages in more than fifty per cent of its activities in producing

investment income.

2) The foreign tax burden in that country is substantially lower

than that in Cyprus.

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CALCULATION OF TAXABLE BASE

The following expenses are allowable:

y Repairs, but not improvements, alterations or

additions

y Contributions to an approved fund

y Bad debts and provisions for them

y Non-capital scientific research expenditure

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y Expenditure on patents or patent rights

y Various types of charitable expenditure

y Interest on loans, other than for those used to acquire shares

y Rental payments

y Salaries and other compensation costs for employees and

directors.

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Cyprus Filing Requirements andPayment ofTax

y Company tax returns must be filed in respect of each fiscal(calendar) year by 31st December in the year following thefiscal year.

y It should include balance sheet and profit and loss account,auditor's report, income tax and Defense Tax computationand additional information report.

y Self-assessment operates, and corporation tax paymentshave to be made on-:

I. 1STAugust

II. 30th september

III. 31st december

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Documents

Tax Structure Cyprus