The corporation tax rate imposed on Companies’ taxable profits is increased from 10% to 12,5% starting from 1st of January 2013. The special defense contribution on interest income earned by Cyprus tax residents is increased from 15% to 30%. The law comes into effect from the date of publication to the Government Gazette. Interest income earned by the Cyprus Company and forms part of its ordinary activities is
exempted from special defense contribution and is subject to corporation tax.
The special levy imposed on credit institutions operating in Cyprus on their total deposits increases from 0,11% to 0,15% starting from 1st
of January 2013. Any promotions in the public sector and in the semi-government organizations will be frozen in 2013.
Cyprus highlighted that it maintains important tax advantages. Dividends received and gains from disposal of securities by a Cyprus Company from abroad are exempted from tax. Wide range of Double Taxation Treaties will be still in full force and effect. Any tax losses are carried forward for future utilization for a period of five years. Any expenses incurred by the Cyprus Company are tax deductible provided that they
were incurred for the Company’s business. Profits of a permanent establishment from abroad are exempted from tax in Cyprus.
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