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Measure Name
Date when measure came into force
Increase of the tax rate 2013/04/29
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Generic Tax Name Corporate income tax
Tax name in the national language Εταιρικός Φόρος
Tax name in English Corporate tax
Member State CY-Cyprus
Tax in force since 1991/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Law No 118 (I)/2002 as amended.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope The Republic of Cyprus.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments

All companies as defined by Law 118(I)/2002 as amended. Income from carrying on a business on the basis of a permanent establishment except certain income relating to ships and planes. Basis of assessment article 5(2) of above Law and for special types of income articles 21-23 of above law.

 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Dividends are exempt from CIT but subject to SCD Law under certain conditions

Interest includes interest acquired from usual carrying on of the business or interest acquired from close connection with carrying on of business or interest acquired by an open or close collective investment scheme . Other interest exempt from CIT but subject to SCD Law.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments

Trading Income

 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

If industrial or hotel building average depreciation rate 4% unless acquired between 2012-2014 where average depreciation rate 7%.

Average depreciation period 33  Years
Average depreciation rate 3.0 %
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Average depreciation rate varies depending on type of assets. If acquired ( plant and machinery) between 2012-2014 average depreciation rate 20%

Average depreciation period 5  Years
Average depreciation rate 20.0 %
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

 Assuming plant ( fixtures and fittings) usually average depreciation rate 10%. If acquired ( plant and machinery) between 2012-2014 average depreciation rate 20%.

Average depreciation period 10  Years
Average depreciation rate 10.0 %
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

For expenditure as from 2012 subject to certain conditions average depreciation rate 20%.

Average depreciation period: 5 or 6 years

Average depreciation rate: 20% or 16.67%

Average depreciation period 5  Years
Average depreciation rate 20.0 %
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

No interest deduction up to 7 years for the purchase of private vehicles and assets not used in business, unless purchase of shares as from 2012 of directly or indirectly wholly owned subsidiary subject to certain conditions.


Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
5  Years  
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments

Group losses available only between resident companies. Losses of credit institutions under the Resolution of Credit and other Institutions Law can be carried forward for 15 years.



Comments

Deductions allowed:

The outgoings and expenses wholly and exclusively incurred by the company for the production of the income including:

  • repair of premises, plant, machinery and means of transport
  • ordinary annual contributions paid by an employer to approved funds
  • bad debts of any business if commissioner satisfied that cannot be collected. Any amounts recovered are taxable in year of collection.
  • expenditure for scientific research, patents/patents rights/royalties
  • donations/contributions made for educational, cultural or other charitable purposes to the Republic or local authority. Donations to an approved charitable organisation by the Council of Ministers.
  • interest in relation to a rented property or to the acquisition of business assets used in the business. Interest in relation to purchase of shares as from 2012 of directly or indirectly wholly owned subsidiaries subject to certain conditions.
  • expenses in relation to rents receivable, etc
  • expenses for shares of enterpeneur companies
 
Rate(s) Structure
Nominal corporate income tax rate Rate: 12.50 %

Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 12.50 %


Comments

Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 12.50 % 12.50 %
Outgoing dividends withholding tax
Outgoing interest payments withholding tax
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
5  Years  
Indefinite
5  Years  
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Exemption system unless foreign income more than 50% from investment, (directly or indirectly), and tax abroad substantially less than tax burden in Cyprus , where the credit system applies.

Interest ( as defined in Law) taxed at 12.5% . Other interest exempt from CIT but subject to SCD Law at 30%.

Foreign losses of a permanent establishment can be set off. Losses of non-resident group companies cannot be set off.


Comments   Non-treaty countries

Exemption system unless foreign income more than 50% from investment, (directly or indirectly), and tax abroad substantially less than tax burden in Cyprus , where the credit system applies.

Interest ( as defined in Law) taxed at 12.5% . Other  interest exempt from CIT but subject to SCD Law at 30%.

Foreign losses of a permanent establishment can be set off. Losses of non-resident group companies cannot be set off.

 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio:
Definition numerator
Definition denominator
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

Temporary self assessment in year of assessment in two instalments 31/7 and 31/12. Any balance 1st August following year of assessment.

 
Tax collector

Tax Department

 
Special features

Between 1990 and 2002 the International Business Companies were subjected to 4.25% Corporate Tax Rate.

For the years 2003-2005 the International Business Companies had the opportunity to choose between 4.25% and 10% Corporate Tax Rate, subject to certain conditions.

Between tax years 2006 and 2012 all Companies are subjected to 10% Corporate Tax Rate.

As from tax year 2013 all Companies are subjected to 12.5% Corporate Tax Rate.

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51bd + d51be

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 694.90 EUR 3.57
2011 770.30 EUR 3.94
2010 676.00 EUR 3.54
2009 728.90 EUR 3.94
2008 821.80 EUR 4.37
2007 750.70 EUR 4.30
2006 540.80 EUR 3.35
2005 430.20 EUR 2.88
2004 353.00 EUR 2.55
2003 309.80 EUR 2.42
2002 387.70 EUR 3.23
2001 369.90 EUR 3.21
2000 317.10 EUR 2.95

Comments