Recent publication from stockwatch.com.cy would like for the minister of finance proposing an increase in the income tax applicable to Cyprus Companies. The proposed increase will see the income tax applicable to companies raised from 12.5% to 15%. The proposal to increase the income tax appears to be contradictory to the strategy to reduce the tax base to stimulate real growth.
Focus of Increased Income Tax
Sources close to the source claim that the aim of the amendment is not to collect additional taxes but to mitigate issues resulting from the maintenance of a very low tax base for Cyprus. The issues are predominately relevant for agreements for the avoidance of double taxation as well as excluding Cyprus from any black lists of tax heavens which are periodically circulated. The Cyprus government estimates an annual increase from business amounting to 170 million.
Reduction of Taxes
The surplus of 170 million is proposed to be returned to business by adjusting the following:
- Reduction on the taxes applicable to dividends from 17% to 15%
- Reduction on the taxes applicable to interest from 30% to 15%
- Reduction on the capital gains tax from 20% to 15%
- Elimination of the annual levy payment of 350 per year
- Elimination of the stamp duty applicable on agreements
- Reduction on the allowable deduction of individuals from 1/6 to 1/5
Source: www.stockwatch.com.cy (https://www.stockwatch.com.cy/el/article/oikonomia-forologika/epivevaionei-skepseis-gia-etairiko-foro-15-ypoyrgeio-1)
Update as of 07/08/2019:
CYPRUS: Minister U-turn on corporate tax hike after business shoots it downhttp://www.financialmirror.com/news-details.php?nid=37374
With a headline such as this from the FinancialMirror it is clear the current recommendation to increase the Cypriot income ta for corporations was not accepted by the business.