In Brief

The Parliament voted today 27 March 2020, a number of legislative amendments in response to the COVID-19 outbreak in Cyprus and its impact on the Cyprus economy. The aim of the measures voted is to alleviate businesses from the negative cash flow impact of the coronavirus outbreak. Additional measures affecting the banking sector are expected to be voted on Sunday 29 March 2020. We outline below a summary of the main measures that have been voted.

In detail

1.General Healthcare System - Suspension of increase in the special contribution for the General Healthcare System

The increase in special contribution to the General Healthcare System is suspended for three months without an impact on the implementation of the second phase of the General Healthcare System.The suspension will apply for the months of April, May and June 2020. For the month of March 2020, the increased contribution rates will apply.

2. Law for the settlement of overdue contributions to social insurance related funds

Liabilities to social insurance related funds for which a repayment plan was active by 1 March 2020 in the context of the Settlement of overdue contributions to Social Insurance Funds Law 2016 to 2018: the payment of the installments for the months of March and April 2020 has been suspended and the deadline for settlement is extended by two months.

3.Tax Measures

(a) VAT measures - Obligation to pay VAT

Temporary suspension of the obligation to pay VAT for reasons of business liquidity, without the imposition of any penalties and interest for the periods ending 29 February 2020, 31 March 2020 and 30 April 2020, until 10 November 2020, provided that the relevant VAT returns are submitted within the prescribed deadlines.

The temporary suspension of the obligation to pay VAT will apply to all taxable persons, established and non established in Cyprus, with the exception of taxable persons whose activities fall within the prescribed trading codes as specified below:

1. 35111 producers of electricity

2. 36001 collection and distribution of water

3. 47111 supermarkets and grocery stores

4. 47112 mini markets

5. 47191 retail sale of a large variety of goods of which food products, beverages or tobacco are not predominant

6. 47211 retailers of fruit and vegetables

7. 47221 bucheries including poultry retailers

8. 47231 retailers of fish  and seafood

9. 47241 bakeries

10. 47242 Retail sale of cakes, flour confectionery and sugar confectionery in specialised store

11. 47301 retailers of fuel

12. 47411 retailers of computers, peripheral equipment and software including video games

13. 47611 retailers of books

14. 47621 retailers of newspapers and stationery

15. 47651 retailers of toys except video games

16. 47731 pharmacies

17. 61101 Cyprus Telecommunications Authority

18. 61201 web based services

19. 61301 satellite services

20. 61901 other telecommunication services

(b) Direct Tax Measures

The Collection of Taxes and Assessments Law has been amended to give the Minister of Finance the power to extend the deadline for submission of tax returns as well as the deadline for settlement of tax liabilities, by way of a ministerial decree. We should expect in the coming days a decree from the Minister of Finance regulating the submission and payment deadlines for direct tax liabilities.

(c) Law for the settlement of overdue taxes:

We would like to remind you that the law for settlement of overdue taxes has been amended on 14 February 2020, and tax returns up to and including 2015 may be submitted up to 30 June 2020 in order to qualify for a payment plan. Furthermore, the number of instalments that may be missed without resulting in the cancellation of the payment plan has been increased from three to five.

4.Business and Other Measures

(a) Teleconferences and electronic notices for members of administrative organs

The General Principles of Administrative Law (Law 158(I)/1999 as subsequently amended) has been amended to allow the administration (government, local authorities, and all other organs that qualify as a public authority) to call and hold meetings by way of teleconference. This amendment is introduced to allow the administration to function in all circumstances.

(b) Law on emergency measures taken by the Ministry of Labour, Welfare and Social Insurance

The Minister of Labour, Welfare and Social Insurance has been granted power, for the period from 16 March 2020 to 16 May 2020, to determine, with relevant decisions to be published in the Official Government Gazette, the conditions, the amount and the way benefits will be granted under the emergency measures taken in response to Coronavirus, such as the special sickness benefit, the special leave for the care of children, the special unemployment benefit as well as other emergency measures that may be decided.

(c) Amendment to the Statutory Tenants Law

The amending law adopted today by the House of Representatives provides that any eviction process shall be suspended (and new eviction orders will not be issued) until 31 May 2020. The law only applies to premises built before 31 December 1999. The suspension of eviction provided by the amendment law does not affect the right of the owner to bring legal action against the tenant for the unpaid rents (the tenants remain fully liable to pay the rent for the months of March, April and May). The suspension of eviction provided in the amendment does not apply to tenants who have defaulted payment of rents until 29 February 2020.

The takeaway

The measures taken by the Government signify the importance placed on the support of businesses during these trying times. We, at PwC, are ready to support your business in availing of the benefits of the measures implemented.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.