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Information for Cyprus Expats on the Cyprus Company Corporation tax changes
Following the recent tax reform, the legislation in the field of taxation fully complies with the European Union legislation and with the Code of Conduct for Business Taxation. In addition, Cyprus has fully met its commitment to the OECD in their efforts to eliminate harmful tax competition.
Under the new legislation, which came into effect on 1 January 2003, there is a uniform rate of corporation tax (10%) for all companies resident in the Republic, meaning companies whose management and control is exercised in the Republic. The expatriate employees pay the same rates applicable to resident Cypriots (i.e. 0-30%) but for three years of assessment following the year in which their employment in Cyprus begins, 20% of their emoluments or £5.000, whichever is lower, is exempt from tax.
The introduction of the new legislation makes Cyprus an attractive location for foreign investors. Prior to the tax reforms, IBCs were confined to activities outside Cyprus. As from 1.1.2006, when the three year transition period granted to IBCs wishing to maintain their former status expired, there is no distinction between IBCs and local companies for taxation purposes and they can all engage in local activities. They can now avail themselves of opportunities that the Cypriot market offers whilst being taxed at a much lower rate (10%) than in many other countries.
For further information and updates please refer to:
Ministry of Finance: www.mof.gov.cy
Inland Revenue Department: www.mof.gov.cy/ird
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