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  • Tax Facts & Figures

    2007 - Cyprus*

    *connectedthinking

  • 3

    Tax Facts & Figures

    2007 - Cyprus

    Tax Facts & Figures - 2007 CyprusISSN . 1450-4286

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    ContentsPage

    Preface...........................................................................5

    Personal Income Tax......................................................6-11

    Corporation Tax..............................................................12-17

    Special Contribution for Defence ...................................18-19

    Capital Gains Tax ..........................................................20-21

    Estate Duty ....................................................................23

    Value added Tax.............................................................23-27

    Immovable Property Tax ................................................29

    Trusts .............................................................................30

    Transfer fees by the Department of Land and Surveys .31

    Social Insurance.............................................................32-33

    Stamp Duty ....................................................................34-35

    Tax Treaties withholding tax tables ................................36-39

    Tax diary.........................................................................40-41

    PricewaterhouseCoopers ...............................................42-43

    PricewaterhouseCoopers offices in Cyprus....................44-45

    Your contacts in PricewaterhouseCoopers......................46

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    PrefaceThere are significant benefits from a proper and effective taxplanning. Our people possess the knowledge and expertiseto assist you identify such benefits. We are next to you toshare know-how and innovative specialized solutions tosupport you for structuring your operations in a tax efficient way.

    This publication aims at providing a general description of thetax system in Cyprus. The tax information contained is basedon the tax legislation and practice as at January 2007.A full and detailed description of the prevailing tax system is not the aim of this booklet nor could it be covered in a briefpublication of this kind. Consequently "Tax Facts & Figures - 2007 Cyprus" should only be used as a source of generalinformation and it cannot substitute proper professionaladvice.

    Please do not hesitate to contact us at any of our offices atthe addresses shown at the back of this publication.

    PricewaterhouseCoopersChartered Accountants

    January 2007

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    Personal Income Tax

    Basis of taxationAll Cyprus tax residents are taxed on all income accrued orderived from all sources in Cyprus and abroad. Individualswho are not tax residents of Cyprus are taxed on incomeaccrued or derived from sources in Cyprus.

    An individual is tax resident in Cyprus if he spends in Cyprusmore than 183 days in any one year. Days in and out ofCyprus are calculated as follows:

    (a) the day of departure from Cyprus counts as a day of residence outside Cyprus.

    (b) the day of arrival in Cyprus counts as a day of residence in Cyprus.

    (c) arrival and departure from Cyprus in the same day counts as one day of residence in Cyprus.

    (d) departure and arrival in Cyprus in the same day counts asone day of residence outside Cyprus.

    Personal tax rates The following income tax rates apply to individuals:

    Chargeable income Tax rate Accumulated taxC % C

    0 - 10.000 Nil Nil10.001 - 15.000 20 1.00015.001 - 20.000 25 2.250

    over 20.000 30

    Foreign pension is taxed at the rate of 5%. An annualexemption of C2.000 is granted.

    ExemptionsThe following are exempt from income tax:

    Type of income Exemption limit Interest The whole amount

    Dividends The whole amount

    Remuneration from any office or 20% of income with employment exercised in Cyprus by a maximum amount an individual who was not resident of C5.000 annuallyof Cyprus before the commencementof his employment, for a period of 3years commencing from 1st Januaryfollowing the year of commencementof the employment

    Remuneration from salaried The whole amount services rendered outsideCyprus for more than 90days in a tax year to a non-Cyprus resident employer or to a foreignpermanent establishment of a Cyprusresident employer

    Profits of a permanent establishment The whole amount abroad under certain conditions

    Lump sum received by way of retiring The whole amount gratuity, computation of pension orcompensation for death or injuries.

    Capital sums accruing to individuals The whole amount from any payments to approved funds(eg provident funds)

    Deposits with Housing Finance 40% of the amount Corporations deposited. The

    amount deposited cannot exceed 25% of a persons total income.(This exemption applies for deposit schemesthat existed as at 30April 2003)

    Profits from the sale of securities * The whole amount

    * Securities is defined as shares, bonds, debentures, founders shares and other securities of companies or other legal persons,incorporated in Cyprus or abroad and options thereon.

  • Social grants The following social grants are given:

    Grant of C1.500 per annum for every child receiving full time higher education in Cyprus (with certain restrictions) or full time university education outside Cyprus.

    Grant of C1.800 per annum for blind persons.

    All families resident in Cyprus fulfilling the provisions of the Law, are entitled to a basic child grant, whereas those families that had a gross family (applicant, spouse, children) income, for the year 2004 below 18.000 are entitled to an additional child grant as indicated in the table below.

    C C C

    1 child 224 56 282 children 448 224 1683 children 1.343 504 420More than 3 children 672 per child 224 per child 140 per child

    Upon application, the applicants do not need to submit anyproof/evidence of their income, unless it is the first time claim.

    The above mentioned social grants are those applicable for the year 2007.

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    Tax deductions The following are deducted from income:

    C Contributions to trade unions or The whole amount

    professional bodies

    Loss of current year and previous The whole amountyears

    Rental income 20% of rental income

    Donations to approved The whole amount charities (with receipts)

    Expenditure incurred for the maintenance Up to 200, 300 of a building in respect of which there or 350 per square is in force a Preservation Order meter (depending

    on the size of the building)

    Social Insurance, provident fund, Up to 1/6 of the medical fund, pension fund chargeable incomecontributions and life insurancepremiums (the allowable annuallife insurance premium is restricted to 7 per cent of the insured amount)

    Basic annualgrant

    Number of children in the

    family

    Additionalannual grant forfamilies with anannual incomeup to 10.000

    Additionalannual grant forfamilies with anannual income

    greater than10.000 and up

    to 20.000

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    EXAMPLE OF PERSONAL TAX COMPUTATION C

    Salary 30.000

    Rent receivable 2.500

    Interest receivable 800

    Dividend income 400

    Social Insurance contributions 1.625

    Life insurance premiums 4.100

    Insured sum 50.000

    Provident fund contribution 1.600

    Donations to approved charities with receipts 200

    TAX COMPUTATION:C C

    Salary 30.000

    Rent receivable 2.500

    Interest receivable (exempt) -

    Dividends receivable (exempt) -

    Total income 32.500

    Less: deductionsDonations - (with receipts) 200

    20% of rent income 500 700

    Net total income 31.800

    Life insurance premiums: Restricted to 7 per cent of the insured sum (7% @ C50.000 = C3.500).Provident fund, social insurance contributionsand life insurance premiums restricted to 1/6 of net total income (C1.600 + C1.625 + C3.500 = C6.725restricted to 1/6 of C33.000*) 5.500

    Chargeable income 26.300

    Tax payable: - first 20.000 2.250- rest 6.300 1.890

    26.300 4.140

    Income tax payable 4.140

    Special contribution for defence

    Dividends receivable C400 15% 60

    Interest receivable C800 x 10% 80

    Rent receivable C2.500 25% = C1.875 x 3% 56,25 196,25

    Total tax payable 4.336,25

    * 33.000 is made up of total income including interest and dividendless deductions

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    Corporation tax

    Basis of taxationAll companies tax resident of Cyprus are taxed on all theirincome accrued or derived from all sources in Cyprus andabroad. A non-Cyprus tax resident company is taxed on incomeaccrued or derived from a business activity which is carried outthrough a permanent establishment in Cyprus.

    A company is resident of Cyprus if it is managed and controlledin Cyprus.

    Corporation tax rates Tax rates

    %Semi-government organisations 25Other companies 10

    Exemptions

    Type of income Exemption limit Profit from the sale of securities The whole amount

    Dividends The whole amount

    Interest not arising from the ordinary 50%activities or closely related to theordinary activities of the company

    Profits of a permanent The whole amountestablishment abroad, under certain conditions

    Tax deductions All expenses incurred wholly and exclusively in earning theincome of the company including:

    Type of expense Exemption limit Donations to approved The whole amount

    charities (with receipts)

    Employers contributions to social The whole amountinsurance and approved fundson employees salaries

    Any expenditure incurred for Up to 2