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Cyprus has eventually decided to waive penalties and interest on Value Added Tax (VAT) for a period of time but did not reduce its rate. The VAT measures the Cyprus government recruited to help curtail the adverse effects of the coronavirus pandemic on the local economy were enacted by the House of Representatives on 27 March 2020. The Measures The actual amendments to the legislation are made to the articles that impose penalties and interest. Specifically, the imposition of penalties and interest (including penal penalties) are waived with regards to the payment of any due VAT for the VAT quarters ending: (i) 29 February 2020 (due 10 April 2020) (ii) 31 March 2020 (due 10 May 2020) (iii) 30 April 2020 (due 10 June 2020) but only if (i) The VAT declaration is submitted by the due date, and (ii) Any VAT payable is paid by 10 November 2020. We note that the penalty for the late submission of the VAT return will continue to apply and will continue to constitute a penal offence. The application of the amendments does not apply to certain categories of businesses as follows: Producers of electricity Collection and distribution of water (for water supply) Groceries and supermarkets that are mainly for food Convenience stores and mini markets Retailing of a variety of goods in department stores where food, beverages and tobacco are not predominant Retail of fruit and vegetables - fruit shops Retail sale of meat and meat products including poultry Retail sale of fish and seafood-fish and molluscs Retail sale of bread, other bakery and confectionery products Retail sales of fuel Retail sale of computers, peripherals and software Retail sale of books Retail sales of newspapers and stationary Retail sales of toys of all kinds except video games Pharmacies The Cyprus Telecommunications Authority (CYTA) Internet services Satellite telecommunications services Other telecommunication services, besides CYTA Opinion This is a very positive step for the businesses that will benefit and that will have strains on their cash flow. The previous announced limit of such measures to businesses with a turnover of less than €1m or businesses that have suffered a reduction in turnover of more than 25%, have been removed. A reduction in VAT rates that had been initially announced have also been abandoned for now. There are certain inherent problems present, as follows: There is a delay for the payment of the VAT but not for the submission of the VAT declaration. The problem here is that the accountancy departments are understaffed and sub-working. The accuracy and completeness of the books and records will suffer meaning that the VAT declarations that will be submitted may be incomplete. Where the net of the corrections (output less input VAT) exceeds €1,7k, a taxable person has to apply for the correction in writing to the Tax Department and await the reply in writing. In such a case, were the reply of the Tax Department comes after the 10 November, it is not clear that the penalties and…

Value Added Tax (VAT) has been recruited by the Cyprus government to help curtail the adverse effects of the coronavirus pandemic on the local economy. In light of the grave consequences of coronavirus (Covid-19), Cyprus announced on 15 March 2020 a national fiscal package of measures to boost the soon to be cash-starved economy. The support package includes, among other measures, a temporary suspension of the obligation to pay VAT for two months and a reduction of VAT from 19% to 17% and from 9% to 7%. The VAT-related support measures are: Temporary extension of the VAT payment obligation for two months for business liquidity purposes, without the imposition of any penalties. The next deadline for the VAT quarter ending 29 February 2020 was the 10th of April 2020. This concerns companies with a turnover of not more than €1 million, according to their tax declarations submitted in 2019, as well as companies the turnover of which will have been reduced by more than 25%. Arrangements will be made for tax dues to be paid progressively by 11 November 2020. This means that payments will not be due in full at the new due date, and perhaps later due payments will also be postponed. Τhe deadlines for the submission of the VAT returns are not affected. The measure is expected to benefit the cash flow of impacted businesses and create liquidity of €240m. Temporary reduction of VAT from 19% to 17% for a period of two months. It is not clear whether the reduction will apply in general or will it not include supplies that have been effected but not yet invoiced. In addition, there will be a temporary reduced rate cut from 9% to 7% for a period of three and a half months. The rate applies to mainly hotels and similar accommodation as well as to domestic passenger transport. The three-and-a-half-month period aims at benefiting the hospitality industry which has essentially been paralyzed, with hotels having being ordered to suspend operations until 30 April 2020. The effect of the VAT reductions on the Cyprus budget is estimated at €70m. The measures above will be implemented as soon as the relevant legislation is enacted, which is expected in the following few days. Further clarifications, especially on the details, are anticipated in the wording of the legislation.

Nicosia – The Cyprus government declared yesterday a state of emergency due to the coronavirus (Covid-19) pandemic and essentially locked down the country. In a press conference following day-long meetings at the Presidential Palace, Cyprus President, Nicos Anastasiades, stressed the times are critical and that the island is experiencing a state of emergency. “What is needed, and I would like to stress this once again, is a sense of responsibility and social solidarity on the part of each and every one individually to deal with the critical situation we are facing,” he said. He, and his Ministers of Health, Finance and Labour, went on to announce a series of hard- hitting measures, aiming at combatting the virus. Only Cypriots will be allowed into the country provided they produce a medical clearance, and those who do arrive in, will be placed in a compulsory quarantine for two weeks. Operations of many private businesses are suspended, including department stores, nightclubs, hotels and malls and a €700m stimulus package, which includes a reduction in VAT from 19% to 17% for two months, was announced to assist the economy. Other private businesses are allowed to continue operating, for the time being. Civil servants will work from home wherever possible while non-vital services will operate with skeleton staff. Specifically: Between 6pm on 16/3/2020 and 30/4/2020, entry to the Republic of Cyprus will only be granted to individuals who fall under the categories listed below, provided that, upon arrival, they are able to submit a medical certificate, issued no more than 4 days before, showing that they have been tested for coronavirus by certified medical centers in their country of origin: Cypriot citizens. Legal residents in the Republic of Cyprus. European nationals or third-country nationals working in the Republic. Nationals of countries who are in a designated diplomatic service or mission under bilateral or international Conventions. European or third country nationals attending educational institutions in the Republic of Cyprus. Individual cases of European nationals or third-country nationals for unavoidable professional obligations, provided that the relevant permit has been obtained from the competent Ministry. All travellers returning to Cyprus from abroad, regardless of their country of origin, will be placed under a 14-day compulsory quarantine at accommodation facilities designated by the government. Cypriot students who choose to remain overseas for the Easter holidays will be subsidised by the state with €750. Many private businesses that serve consumers, such as cafes, will be closed as of today and for four weeks. The decision covers malls, department stores, cinemas, theatres, libraries, museums, archaeological sites, betting shops, casinos, sports venues and clubs, theme parks, barbershops and hairdresser salons, beauty parlours, cafes, bars, and all food and beverage businesses excluding those that only do delivery and take away. Supermarkets, pharmacies, private health services, bakeries, kiosks, and petrol stations will remain open under certain conditions. Other private business, such as law and accounting firms, will remain open for the time being, “as long as they follow strict hygiene measures for the protection…

Nicosia - The number of unemployed persons in the 4th quarter of 2019 amounted to 6,3% of the labour force or 28.481 persons, according to data released by the Cyprus Statistical Service late last month. This compares favourably to an unemployment rate of 7,6%, or 33.383 in the corresponding quarter of 2018. For the whole of 2019, the unemployment rate was 7,1% in comparison to 8,4% in 2018 and over 16,5% in the 2nd half of 2013. According to the Cyprus Statistical Service, the labour force in the 4th quarter of 2019 amounted to 449.784 persons, or 62,9% of the population (males 68,8%, females 57,6%) in comparison to 440.765 persons (62,5%) in the corresponding quarter of 2018. The number of employed persons was 421.303 and the employment rate 59,0% (males 64,8%, females 53,5%) in comparison to 407.382 persons (57,8%) in the corresponding quarter of 2018. Employment For the age group 20-64, the employment rate was 76,0%. The rate for males was 81,7% and for females 70,7%. In the corresponding quarter of 2018 the rate was 74,5% (males 80,2%, females 69,3%). For the age group 55-64 the employment rate was 61,4% in comparison to 61,1% in the corresponding quarter of 2018. According to the distribution of employment by sector, the biggest percentage of employed persons was in Services (78,4%), followed by Manufacturing (18,9%) and Agriculture (2,7%). For the 4th quarter of 2018, the corresponding percentages were: Services 80,8%, Manufacturing 17,1% and Agriculture 2,1%. The share of part-time employment to total employment was 11,1% or 46.610 persons (males 7,3%, females 15,3%). The corresponding rate for the 4th quarter of 2018 was 11,2% (males 8,1%, females 14,6%). 86,5% or 364.233 of the total employed persons were employees, of which 14,1% (51.164 persons) had a temporary job. In the corresponding quarter of 2018 employees accounted for 86,7% of total employment of which 12,5% had a temporary job. Unemployment For young persons aged 15-24 years old, the unemployment rate was 16,0% of the labour force of the same age group (males 15,9%, females 16,0%) in comparison to 20,6% (males 25,7%, females 16,0%) in the corresponding quarter of last year. As far as the duration of unemployment is concerned, 50,4% of the total unemployed persons searched for a job for a period of less than 6 months, 19,2% for a period of 6-11 months, whereas a percentage of 30,4% were long-term unemployed. The corresponding rates for the 4th quarter of 2018 were 53,7%, 14,2% and 32,1%.

Brussels - British overseas territory the Cayman Islands has been placed on an EU tax-haven blacklist, along with Palau, Panama, and the Seychelles. The latest decision made by the EU Finance Ministers on Tuesday, 18 February 2020, follows the UK's departure last month from the European Union. The Ministers said it was listed because investment funds based there do not reflect real economic activity. The four black-listed countries join Oman, Fiji and Vanuatu, which have also been accused of failing to crack down on tax abuse. The EU said the Cayman Islands, which has no income tax, capital gains tax or corporation tax, does not have "appropriate measures" in place to prevent tax abuse, allowing firms to register there, despite having minimal presence in the territory. The jurisdiction was previously on a ''grey list'' that gave it time to introduce new laws to tackle tax deficiencies. But it did not implement the "economic substance" reforms by the deadline as promised, the EU said. Cayman Islands' Premier, Alden McLaughlin, said the government has approved many reforms sought by the EU and has already contacted the EU about the process of being removed from the blacklist. The Cayman Islands is the first UK territory to be added to the EU blacklist. Blacklisted countries face difficulties accessing EU funding programmes, while European companies doing business in those jurisdictions have to take additional compliance measures. Officials said that Turkey, which is currently on the "grey" list, would not be moved to the blacklist despite concerns about its information sharing with some EU member states. The list of non-cooperative jurisdictions for tax purposes, which the EU started in 2017 to put pressure on countries to crack down on tax havens and unfair competition, included 15 countries in 2018 but has since shrunk. The other listed jurisdictions are Fiji, Oman, Samoa, Trinidad and Tobago, Vanuatu and the three U.S. territories of American Samoa, Guam, and the U.S. Virgin Islands.

Nicosia - The Cyprus VAT Association (CYVA) is now accepting membership applications. CYVA is a newly-formed association aiming at bridging the communication gap between businesses and Value Added Tax (VAT) professionals with the government, the Tax Department and lawmakers. CYVA also aims at contributing to the proper adoption of VAT European Directives and Regulations, to help modernise and simplify the Cyprus VAT legislation, and to liaise and consult with the European Commission and other international bodies on Cyprus VAT matters. Eligible for membership with the Association are all local and international businesses and professionals in Cyprus such as trading and construction companies, importers, consultants, such as audit, accounting and law firms, doctors, architects, engineers, administrative services providers, as well as self-employed persons. Annual Membership is set at €150. CYVA members enjoy a wide range of benefits, including: Receiving, reviewing and commenting on all draft legislation, circulars or other documents submitted to CYVA by the Ministry of Finance; Participating in the activities of CYVA in the VAT areas of their interest; Submitting suggestions or highlighting practical VAT problems their businesses face as topics for discussion and dialogue between CYVA and the Department of Taxation (CYVA does not deal with the resolution of VAT assessments nor does it provide VAT advice); Participating in CYVA’s member-exclusive VAT seminars, workshops and conferences; Receiving updates on CYVA’s activities placing them on the pulse of VAT in Cyprus. The inaugural meeting of CYVA took place recently in Nicosia, during which the founding members of the association, Chelco VAT Ltd, Nexia Poyiadjis, Scordis, Papapetrou & Co LLC, Andreas Konnaris LLC, GDK Optimus Audit Services Ltd, C. Efstathiou Audit Ltd and Kinanis LLC elected the Board of Directors and discussed their first steps. Kinanis LLC Partner, Demetra Constantinou, was elected Chairwoman, the Managing Director of Chelco VAT Ltd, Alexis Tsielepis, was elected Vice-Chairman, Chelco VAT Director, Panayiotis Panayi, as Secretary and Nexia Poyiadjis Senior Partner, Susana Poyiadjis, as Treasurer. For more information contact CYVA at [email protected] or at 22 558888. To join CYVA click here for the membership form.

New York - Cyprus ranked in as the 36th most expensive nation to live in, according to a recent survey by New York-based CEOWORLD Magazine. Switzerland has emerged as the most expensive nation to live in, followed by Norway and Iceland according to the CEOWORLD 2020 report, which was based on a range of living costs. Making up the top 10 were Japan, Denmark, the Bahamas, Luxembourg, Israel, Singapore, and South Korea. Cyprus is cheaper to live in than Malta and Italy and is marginally more expensive than Greece which was ranked 38th and Spain in 44th. Turkey was 102nd. Pakistan is the world’s most affordable country, followed by Afghanistan, India, Syria, Uzbekistan, Kyrgyzstan and Tunisia, the same survey showed. Of the top 20 nations, nine were in Europe, five in Asia, one in North America, one in Africa, two in the Caribbean, and two in Oceania. The US was ranked 20th, the UK 27th and Russia 82nd. CEOWORLD magazine used New York as a benchmark which was given an index score of 100.  It based its assessment on a range of living costs, such as accommodation, clothing, taxi fares, utility, internet, the price of groceries, transport, and eating out. Switzerland, Norway and Iceland all scored higher than 100 while Cyprus came in at 57.93, meaning the cost of living in Cyprus is a little over half of that of New York City. In comparison, Pakistan, the cheapest country in the world to live in, scored 21.98. The rankings are based on five major metrics: cost of living, rent, groceries, eating out and purchasing power. CEOWORLD magazine, which is based on 5th Avenue, New York, collected and reviewed data from dozens of studies, consumer price indexes, the Numbeo Cost of Living Index and numerous national and international media reports.

Limassol – In a celebration of humanity and solidarity, staff from Costas Tsielepis & Co Ltd and associated companies joined the offices of Dinos Antoniou & Co Ltd earlier this week in donating blood. The blood donation was held at the Globalserve Business Center in Limassol on Thursday, 17 January 2020. It was participated by the management and staff of the firms as well as guests. Cyprus has almost double the proportion of active blood donors compared to any other EU country. One pint of blood can save up to three lives. A single victim of a serious car accident can require more than 50 pints of blood while the average red blood cell transfusion in cancer patients is 3.4 pints, requiring four donors.

Limassol – Chelco VAT Ltd Director, Panayiotis Panayi, became a partner of the firm on 1 January 2020. Panayiotis is a seasoned professional with over 10 years of experience in VAT advisory and compliance services. An Associate Chartered Accountant (ACA) and a member of the Institute of Certified Public Accountants of Cyprus (ICPAC), he also holds a Bachelor of Arts degree in Accounting and Finance from Manchester University in the UK. In 2017, he was awarded the prestigious Expert in EU VAT degree, finishing first in his class. Panayiotis trained with Big Four firms in the UK and Cyprus as a Chartered Accountant with the Institute of Chartered Accountants in England and Wales (ICAEW), before joining Chelco VAT Ltd as Senior VAT Consultant in 2014. He was promoted to Director in January 2018. Panayiotis teaches VAT at local seminars and workshops and has authored or contributed to various articles and other publications in Cyprus and abroad on matters pertaining to Cyprus and EU indirect taxation. Managing Director and founder of Chelco VAT, Alexis Tsielepis, commented that “Panayiotis’ partnership was the result of his impeccable technical and interpersonal skills, hard work, dedication and outstanding work ethics.” Tsielepis labeled Panayiotis as “the best wingman” he could ever have, adding that Chelco VAT is lucky and privileged to have him on board. “Having such a dedicated professional like Panayiotis on your team is a tall order, literally and metaphorically,” Tsielepis said. The management and staff of Chelco VAT and its associated companies wish him good luck in his upgraded role. He can be reached at [email protected]. Chelco VAT Ltd is the island’s first VAT-dedicated firm and is now considered the foremost authority on indirect tax matters in Cyprus. It is also a leader in the organisation and delivery of VAT seminars, workshops and in-house technical courses via its educational arm, the Chelco VAT International Academy.

Nicosia - Total deposits in Cyprus reached €48.6 billion in November 2019, while outstanding loans €34.2 billion, the Central Bank of Cyprus announced last week. Specifically, according to the official data, total deposits in November 2019 recorded a net drop of €84.1 million, compared to a net decrease of €158.3 million in October 2019. In comparison, total deposits in Cyprus banks, which included Coops, in December 2014 stood at €47.04 billion, while in December 2012, just before the bailout, at €70.1 billion. The annual growth rate in in November 2019 reached 2.2%, compared with 1.8% in October 2019. Outstanding deposits reached €48.6 billion in November 2019. Total loans in November 2019 exhibited a net increase of €34.9 million, compared with a net decrease of €75.0 million in October 2019. The annual growth rate stood at 1.3%, remaining unchanged compared with October 2019. The outstanding amount of total loans reached €34.2 billion in November 2019.