KPMG CY | KPMG | CY

Tax Alert - Arrangement for payment of tax arrears

Tax Alert - Arrangement for payment of tax arrears

Provisions have been introduced by the introduction of a new law regarding the payment of tax arrears and the possibility of arranging a payment by installments.

1000

Board Member, Head of Tax

KPMG in Cyprus

Contact

Related content

tax-alert

What is the Arrangement?

The Law will refer to the possibility for applicant taxpayers to conclude an arrangement with the Tax Department concerning the payment by installments of taxes due (including penalties and interest).

The tax arrears shall be settled to equal installments, the number of which shall not exceed:

  • Fifty Four (54) installments for tax arrears not exceeding EUR€100.000 with a minimum installment amount of EUR €50
  • Sixty (60) installments for tax arrears exceeding EUR€100.000 with a minimum installment amount of EUR €1.852

The taxpayer shall be exempted from the payment of penalties, interest and charges proportionately with the number of installments agreed with the Tax Department.  Further, during the period of the Arrangement, no additional penalties, interest or charges shall accrue.

To what taxes, does the Arrangement apply?

The Arrangement as introduced applies to tax arrears including penalties,
interest and charges, arising under:

  • The Cyprus Income Tax Laws 
  • The Special Contribution for the Defence Laws
  • The Capital Gains Tax Laws
  • The Immovable Property Tax Laws (up to the date they were abolished)          
  • The Inheritance Tax Laws (up to the date they were abolished)
  • The Special Contribution Laws for employees of both the private and the public sector (up to the date they were abolished)
  • The Stamp Duty Laws
  • The Value Added Tax (VAT) Laws

To which periods does the Arrangement apply?

The Arrangement will apply to tax arrears arising in designated periods
that precede the entry into force of the Law which will be set by the Tax
Commissioner through a notification and will be published in the Official
Gazette.

The Tax Commissioner has the discretion to allow the application of the Arrangement to tax arrears arising after the entry into force of the law but are relevant to the designated periods to which the Scheme applies.

The relevant provisions shall not apply with respect to undeclared funds, deposits or transfers made for the benefit of the same individuals and/or applicants seeking to benefit from the arrangement, irrespective of whether these funds have been located in Cyprus or abroad.

What is the procedure?

An application should be submitted within a period of 3 months from the entry into force of the Law. The applicant must submit all tax returns due for the periods falling under the Scheme.

The application is assessed by the Tax Commissioner within 15 days from the receipt of the application and the taxpayer is informed of the Tax Commissioner’s decision. If the Tax Commissioner does not respond within the 15-day period, the application is considered admissible and the applicant’s suggestions are adopted.

The applicant should submit an acceptance of the Arrangement within a period of 15 days.

The applicant taxpayer has the right to object to a Tax Commissioner’s decision to decline the application. The objection must be filed within a period of 15 days from the date the Tax Commissioner’s decision is notified to the applicant. The objection must be assessed within a further period of 30 days.

What else should be taken into account?

The Arrangement is automatically cancelled if the taxpayer delays the
payment of :

  • Any installment for a period of three months, or
  • 3 cumulative installments, or

Further, the Arrangement will also be cancelled upon failing to submit any tax return due during the period of the Scheme and settle all current taxes arising.

When will the new provisions enter into force?

The date of entry into force of the new provisions shall be specified in a notification to be issued by the Tax Commissioner which will be published in the Official Gazette. Though such notification has not yet been issued, it is estimated that the Tax Commissioner shall set the date of entry into force during mid-April 2017.

Connect with us

 

Request for proposal

 

Submit