Tax Update – 2 January 2014
Increase in VAT rates from 13th January 2014
From the 13th January 2014 the standard rate of VAT, which is applicable on the supply of goods and services will be increased from 18% to 19%.
In addition, the reduced rate of VAT, which is applicable on restaurant and catering services, tourist accommodation and on the transport of passengers within Cyprus, will be increased from 8% to 9%.
The reduced rates of 5% and 0% will remain unchanged.
- Stock takes- all taxable persons who are affected by the change in the standard rate of VAT must undertake a physical stock count (unless an electronic stock taking system is used) of their inventories by the close of business of 12 January 2014. The stock take should include both values and quantities. The final stock report should be kept for a period of 6 years. Please note that for Income Tax purposes stock takes should be performed around the year end.
Changes in Social Insurance
As from the 1st January 2014, the rate of social insurance contributions made by the employer and employee will increase from 6,8% to 7.8% on the gross salary of the employee.
Based on the new Regulations issued in accordance with the Social Insurance Law, each employer is required to issue a Certificate of Commencement of Employment. This certificate should be completed for each new employee that has commenced employment on or after 17 December 2012.
The Certificate is available from the Social Insurance office and it is made up of three copies- a white, a pink and a yellow copy. Once the Certificate is completed by the employer, it must be signed by both the employer and employee. The Certificates should be numbered in sequential order and the copies kept as follows:
- Yellow copy– this should be kept by the employee.
- White copy– this should be sent to the Social Insurance Department not later than the end of the month from the date which the employee commenced employment.
- Pink copy– this should be kept by the employer.
Increase in Special Contribution on salaries of employees, pensioners and self-employed individuals of the private sector
As from 1 January 2014 the rates of special contribution on salaries of employees, pensioners and self-employed individuals of the private sector are as follows:
|Monthly gross salary €||Rate|
|1.500-2.500||2,5% minimum €10|