Law amending the Income Tax Law in Cyprus
- The corporation tax rate is increased from 10% to 12.5%- effective 1 January 2013.
- Pursuant to the Resolution of Credit and other Institutions Law, when the operations of one credit institution are transferred to another, the tax losses of the former will be able to be utilized by the latter for a period not exceeding 15 years from the end of the tax year in which the operations were acquired and the tax losses transferred- effective from 25 March 2013.
Law amending the Special Contribution for Defence (SCD) Law
- The rate of SCD on interest income received by, credited to (or deemed to have been) Cyprus tax residents is increased from 15% to 30%- effective from 29/4/2013. Non-Cyprus tax residents are not subject to SCD and there is no withholding tax on the payment of interest abroad. It should be noted that interest income from the ordinary course of business (eg financing companies) is subject to corporation tax and not SCD.
Law amending the Special Levy on Credit Institutions Law
- For the years 2011 and 2012, the Special Levy introduced on credit institutions which operate in Cyprus amounted to 0.095% of their total deposits. In December 2012 the provisions were extended indefinitely and the rate was increased to 0.11%. The latest amendment increases the Special Levy to 0.15%- effective 1 January 2013.
Despite the above amendments Cyprus continues to be a favorable destination for foreign investors with an attractive tax regime which includes, but is not limited to the following:
- Tax-free dividend income (subject to conditions)
- No withholding tax on dividends, interest, and royalties paid abroad (subject to conditions)
- No capital gains on the sale of property outside Cyprus
- Tax-free disposal of securities (subject to conditions)
- Tax losses can be carried forward for 5 years
- Numerous Double Taxation Agreements