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Overdue Taxes - Extension for the submission of applications

Overdue Taxes - Extension for the submission

Further to the Tax Alert issued by our Firm on 17 July 2017, informing you of the procedure for the settlement of overdue taxes of the Outstanding Tax Debts Law of 2017, we would like to inform you that, according to the amending Law 129 (I)/2017, published in the Official Government Gazette on 29 September, 2017, the House of Representatives voted to extend the deadline for submitting applications.

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Board Member, Head of Tax

KPMG in Cyprus

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The deadline, which was given and expired on 3 October 2017 is extended until 3 January 2018. In the same amending Law, the deadline for submitting the tax returns, for the purposes of filing an application, to join the Scheme for the settlement of Overdue Taxes (hereinafter referred to as the “Scheme”) is the 30th June 2018.

If tax returns are submitted after 3 January 2018 but before 30 June 2018, only overdue taxes with respect to periods before 31/12/2015 and for which the Tax Department issued an assessment can be admitted to the Scheme.

It is clarified that, tax returns submitted by 3 January 2018, may be included in the Scheme as self-assessed without waiting for their assessment by the Tax Department. In relation to VAT returns, as the submissions are always considered as self-assessments, they may be included in the Scheme if submitted after 3 January 2018 but before 30 June 2018. In such a case, the Tax Commissioner’s approval is required, since there will be no possibility of submitting the application for the Scheme electronically via the “Ariadni” Government gateway portal.

Examples

Example 1

A taxpayer has submitted his tax return for the year 2014 before 3 January 2018 (i.e 10 November 2017) and based on the tax return he has an amount due. The taxpayer has submitted all his tax returns including 2015 up to 3 January 2018.

The taxpayer will have the right to apply to join the Scheme, with self-assessment without waiting for the assessment by the Tax Department. The application to join the Scheme should be made before 03 January 2018.

Example 2

A taxpayer has submitted the tax return for the year 2014 before 3 January 2018 and based on the tax return he has an amount due. The taxpayer has submitted his 2015  tax return in March 2018 (after 3 January 2018 but before 30 June 2018).

The taxpayer will not have the right to apply to join the Scheme with self-assessment for the year 2014. The taxpayer should wait for a tax assessment to be issued by the Tax Department before applying for the Scheme.

Example 3

A taxpayer has submitted his tax return for the year 2014 before 30 June 2018 (all tax returns up to 2015 have been submitted by 30/6/2018). On 10 November of 2020 a tax assessment for the year 2014 is issued and a deadline up to 31 December 2020 is given to the taxpayer in order to proceed with the payment of the debt.

The taxpayer will be entitled within 6 months from the date on which the debt becomes due, i.e. as from 31 December 2020 to apply to join the Scheme.

Example 4

A taxpayer has submitted his tax return for the year 2014 after 30 June 2018 (e.g. 8 July 2018). In November 2020 a tax assessment for the year 2014 is issued. The taxpayer will not be entitled to apply to join the Scheme.

Example 5

A taxpayer submits a VAT return concerning a period before 31 December 2015 after 3 January 2018 but before 30 June 2018.

The taxpayer may apply to join the Scheme immediately without waiting for an assessment, since VAT is considered as self-assessed tax.

Example 6

By 3 January 2018 the taxpayer has submitted income tax returns up to the year 2012, for which tax assessments have been issued resulting to tax payables. The tax payables have become overdue as they were not paid. The tax returns for the years 2013, 2014 and 2015 are submitted after 3 January 2018 but before 30 June 2018.

Only the payable amounts resulting from tax assessments to be issued by the Tax Department for the years 2013 to 2015 can admitted to the Scheme but not the overdue taxes for the year 2012. In order to take advantage of the Scheme for all the years, the taxpayer has to submit all tax returns up the year 2015 by 3 January 2018.

Example 7

By 3 January 2018 the taxpayer has not submitted  income tax returns for the years 2010 to 2015. He submitsall his tax returns by 30 June 2018.  

When the assessments for the years submitted by 30 June 2018 are issued, the taxpayer will have six (6) months from the date when the amounts have become overdue to apply to join the Scheme.

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