Filenews 11 June 2023 - by Eleftheria Paizanou
The approval of a bill for the tax exemption of foreign employees of companies in Cyprus is pending
Probably this week, the bill on tax relief provided by the state to high-paid executives of companies abroad, with the aim of attracting them to Cyprus, will be approved.
The bill amends the Income Tax Law, so that a person who resided abroad before his first employment in the Republic is exempt until the exhaustion of the 17-year period and the tax exemption is not terminated in case the employee changes employer.
Also, in order to receive the tax exemption, the employee must have been a non-resident of the Republic for at least 15 years prior to his first employment, instead of ten years as provided by the current legal framework.
On Monday, the bill will again be put under the microscope of members of the parliamentary Finance Committee. It has already been revised several times because of the reservations expressed during its debate, which delayed its adoption.
Affects tax returns
This bill is also linked to the submission of tax returns for the tax year 2022. As long as the passage of this bill is delayed, the start of the submission of tax returns will also be delayed. Besides, for this reason, the Council of Ministers has approved a relevant decree, by which the deadline for submitting tax returns and paying the tax is extended until October 2. The relevant decree was published on Friday 2/6 in the Official Gazette of the Republic.
It is worth noting that when the controversial bill is approved, the required changes to the TAXISnet system will follow. It is estimated that changes to the system will last around 2 weeks.
The Commissioner of Taxation, Sotiris Markides, speaking to "F", stated that the weaknesses and delays of the state are not right to burden taxpayers, which is why it was decided to extend the deadline from July 31, 2023 to October 2, 2023. "When the procedures for the adoption of the aforementioned bill are completed, so that we have the final text, we will proceed to the incorporation of the provisions of the legislation in the Declaration of Income of the Individual 2022 and its posting in the TAXISnet system," he added.
It should be noted that in previous years, the submission of tax returns began in April and was completed in July.
In the meantime, for both the tax year 2022 and 2023, employees and self-employed who have annual incomes up to €19,500 will not be required to submit tax returns. Despite the fact that by law it is mandatory for all taxpayers to submit their income returns, exemptions were granted due to the change in the system of the Tax Department. As it is known, from 2024 the submission of tax returns will be done through the new Tax For All system [However, those who have lived in Cyprus for 17+ years must submit a return, regardless of income level, for the defence levy]
Tax revenues increased by 21%
Meanwhile, the state's tax revenue increased by almost 21% for the first quarter of the year. According to data from the Tax Department, from January to March state coffers received tax revenues of €1.55 billion, compared to €1.28 billion. in the corresponding quarter of 2022.
The analysis of the relevant data shows that receipts from various direct taxes increased by 195.8%, while revenues from the special contribution of employees and self-employed decreased by 78%. Revenues from the imposition of various direct taxes in the first quarter of the year reached €6.1 million, compared to €2 million. Last year, i.e. this year, €4 million was collected. More.
In addition, corporate income tax revenues increased by 54%. By March, an amount of €284.6 million had been collected, which was €99.7 million. compared to the previous year.
At the same time, during the same period, income tax receipts to individuals increased by 23.7%, reaching €250.8 million. The increase in state revenues was also boosted by VAT, which increased by 14.8%, with the state collecting an amount of €597.7 million, while VAT imposed on customs increased by 19.2%, raising receipts to €180.2 million. Capital gains tax revenues amounted to €47.8m. (36.7% increase), from the special contribution for defence amounted to €150.7 million, from Casino tax receipts reached €2.7 million. (up 5.8%) and from the special tax on credit institutions revenues were €18.8m. (8.9% increase).
At the same time, property tax revenues decreased by 24% (receipts of €1.7 million), stamp duty by 5.4% (revenues of €9.7 million) and by 78% the special contribution of employees (receipts of €1.1 million).
They run to clear tax returns
Update seeks to be the Department of Taxation by clearing €1.9 million. income tax returns of individuals and companies. So far, the clearance of income declarations up to and including tax year 2018, as well as the clearance of corporate income declarations up to and including tax year 2020, have been achieved to a large extent.
According to the Commissioner of Taxation, an individual's income returns for tax years 2019-2021 are expected to be cleared in the coming months. "2019 was the first year that GHS contributions were introduced, which makes the clearance of tax returns more complicated and time-consuming, and at the same time as income taxes are issued, GHS contribution taxes will also be issued, as well as the Special Defence Levy in case of income from sources taxed by ESAs," he added.
As Mr. Markidis explained, the Department proceeded with such a large number of clearances through automatic cross-checks electronically, as well as overtime of the department's officers during the afternoon hours and weekends. "A percentage of the returns are selected on the basis of sampling, on the basis of risk analysis for more checks, and that is why some taxes remain pending until they are examined," he said.
To date, the relevant department has cleared approximately €1.9 million. income tax taxes, special defence contributions and special contributions of employees, as they result from the income statements of individuals and companies. Finally, a total amount of tax was refunded of approximately €90 million, while taxes collected or expected to be collected are over €300 million.
