The parties are "running" to amend some provisions in the tax reform, to deal with the complexities identified in the regulations concerning the granting of tax deductions on taxpayers' income tax.
For about a month now, the reform has been implemented, during which weaknesses and problems have been identified, especially in cases concerning the composition of the family. The Tax Department has already prepared many scenarios to cover all types of families, with the aim of calculating annual incomes for tax deduction purposes. In addition to the complexity identified, there will also be a strengthening of some provisions that were not included in the tax-reform laws.
It is reminded that the tax deductions received by taxpayers for each child or student are €1000 for the first child, €1250 for the second child and €1500 for more than three children. In addition, deductions of €2000 from income tax are granted for the interest on a mortgage performing loan for a main residence and for rents, as well as €1000 for green investments for a main residence and for the purchase of an electric vehicle.
A condition for tax deductions is the annual income of the family, as for 1-2 children the total earnings should be €100,000, for 3-4 children the annual income should be up to €150,000 and for more than five children, the family's income should be up to €200,000.
The changes will exceed seven to eight and will be brought about through the submission of law proposals by the parties, with the aim of them being approved as soon as possible and specifically before the dissolution of Parliament next April for the parliamentary elections.
What the Parliament will promote
In detail, the changes that are being prepared are as follows:
- The tax deductions will also include the costs for the renovation of the main residence. They will concern the interest on loans for renovation. The aim is to help young couples with the high cost of housing. The thoughts that are being made are that the tax deduction should be in the order of €2000 for each taxpayer.
- In order to grant tax deductions, at least one of the children must be a dependent. This applies to cases where the other children of the family become adults and will not be considered dependent. That is, from the moment there is even one dependent child, all children will be counted for the discounts for loan, rent, green purchases.
- In the case of a child who works and lives in the same roof as his parents, the income he receives from his work will not be counted in the annual income of the family for the purposes of granting tax deductions.
- The gross annual income of the family will include the alimony provided by the divorced person and state aids, in addition to child allowances, student sponsorship and allowances for the needy.
- It will increase to €50,000 the income limit for taxpayers who are single, to become beneficiaries of tax deductions. Today, the income ceiling for this category is €40,000. Under the reform, in the case of a single-parent family, the parent with custody receives a double discount, while the other parent, if he falls under the income criteria (€40,000), benefits, but with a single discount for each child.
- Imposition of an administrative fine on those who do not pay the rents for the premises they rent through a bank or electronically. It is worth noting that this measure will be implemented on July 1. That is, the collection of rents for real estate in Cyprus will be carried out exclusively by bank transfer, or payment by debit or credit card, or by any other recognized electronic means of payment. These payments will concern all rents, regardless of amount.
- Those taxpayers who installed photovoltaics in the main residence, the tax deduction for the period in which they were invoiced will be calculated.
- In the event that someone buys an electric vehicle and part of it is paid in cash, then the lump sum payment of the amount will be considered as an expense.
- Changes in other legislative regulations will also be promoted, which will make it easier for taxpayers.
What the Superintendent said to the MPs
Yesterday, the Commissioner of Taxation, Sotiris Markides, informed the members of the parliamentary Committee on Finance about the progress of the implementation of the reform.
By completing the TP 59 form, which taxpayers will hand over to the accounting departments of the businesses, they will declare the discounts they are entitled to. The Registrar assured that whether or not taxpayers manage to submit this form, the earnings they will receive for January will be somewhat increased, as it increased to €22,000 tax-free, while the tax scales are more favourable. In fact, he said, in case taxpayers do not have time to submit the TP 59 form for the January discounts, the amounts will be adjusted accordingly afterwards.
Mr. Markides invited taxpayers to read the explanatory guide posted on the website of the Department of Taxation, before filling out the form for the deductions. At the same time, more than 10 thousand people will attend the seminars organized by the Department for OEB, CCCI, ICPAC and trade unions.
There was a lot of discussion about monogononeic families, with the Registrar noting that the parent who has custody of the child will receive a double discount, while the other parent, if he falls under the income criteria (€40,000), benefits, but with a single discount for each child.
"Where the child lives, the benefits of the single-parent family are given. If there is a decision that it stays on the same days with both parents, then a single-parent family is not created, but the income is counted together and what applies to single-parent families does not apply," he added.
Concluding, he said that in the case of a divorced parent who does not have custody and does not spend the night with the child, in case he remarries and starts another family, his income criterion goes to €100.000 and he is entitled to a dependent's discount for the child from the previous marriage, even though he is under a different roof.
