Partly preceding partly following the negotiations conducted between The European Central Bank-European Commission-IMF troika the House of Cyprus Representatives has voted important and substantial changes, which also affects international businesses. In respect of companies which are mainly involved in international transactions the most important changes are as follows:
• VAT rates increase
The standard VAT rate of 17% increases by 1% to 18% as of 14th of January 2013, and then with an additional 1% to 19% as of 14th January 2014. The reduced VAT rate of 8%, which applies mainly to hotel accommodation and catering services, increases from 13th January 2014 to 9%.
• Tax losses
As of 1st January 2013 tax losses of the previous years can be carried forward up to the following five fiscal years.
• Annual levy
The annual levy of Euro 350 is obligatory also for dormant companies and companies that do not have any assets, which were exempted earlier. The annual levy will first be due in the year of incorporation.
• Collection of taxes
Person convicted as guilty for fraudulent omission or delay in the payment of taxes will be liable to imprisonment for at least a year.
• Changes in keeping of accounting records
Trusts will also be obliged to maintain proper accounting records and prepare Financial Statements, even if their income derives from dividends and interest from sources outside of the Republic.
• Corporate services
In the future corporate services can be provided only by lawyers, auditors or licenced corporate service providers.
• Temporary tax payments
The instalments under the temporary tax assessment are reduced from 3 to 2 equal instalments and should be executed by 31st of July and 31st of December each year.
• Safekeeping of books and records
The safekeeping of accounting books and records of a taxpayer are reduced from seven to six years.
• Social Insurance
The social insurance rate increases from 12,6% to 14,6% which equally divided between the employee and the employer. The retirement increases from age of 63 to the age of 65. In case of early retirement the pension decreases by 0,5% for every month. The annual adjustment on the pensions is suspended from until 2016.

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