The Parliament implemented 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. We outline below a summary of the main measures that have been voted.

Tax measures

VAT measures – Obligation to pay VAT

Amendments to the value added tax (VAT) law, intended to assist businesses manage their cash-flow due to the coronavirus (COVID-19) pandemic, delay the dates for remitting VAT payments.

The amendments relate to the deferral of payment of VAT for periods ending 31 December 2020 and 31 January 2021. The VAT payment for these periods is due in three equal instalments on the following dates:

• 10 April 2021
• 10 May 2021
• 10 June 2021

The deferral of payment of VAT due only applies to periods ending on 31 December 2020 and 31 January 2021, provided that:

• The relevant VAT returns are timely filed (10 February and 10 March, respectively)
• Taxpayers do not come within categories specified in the amending law. Businesses may need to confirm their economic activity code with the tax department to check whether they fall under the specified categories.

If the conditions are met and the amount due is paid in three equal instalments by 10 April 2021, 10 May 2021, and 10 June 2021, neither administrative penalties nor interest will be levied.

Direct tax measures

The Minister of Finance has been given power to extend submission of tax returns, tax liabilities deadlines. The Assessment and Collection of Taxes Law, on 12 March 2021, the Minister of Finance has issued a decree No 105/2021 which replaces decree No 155/2020 issued on 9 April 2020.

In accordance with a Decree issued on 12 March 2021, the following deadlines are extended to 30 September 2021:

• Electronic submission of the 2019 corporate income tax return (TD4), and
• Electronic submission of the 2019 personal income tax return (TD1A) of individuals preparing audited financial statements (FS).

Business support

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 has been introduced to allow the administration to continue to be functional in all circumstances.

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 1 March 2021 to 31 March 2021, to determine, with relevant decisions to be published in the Official Government Gazette, conditions, amount and method benefits will be granted under the emergency measures taken in response to Coronavirus, such as special sickness benefit, special leave for care of children, special unemployment benefit as well as other emergency measures that may be decided.

Accounting implications

The Minister of Finance has extended deadline for submission of corporate income tax returns (forms TD4) and for personal income tax returns (forms TD1) of individuals preparing audited financial statements for financial year 2019, from 31 March 2020 to 30 September 2021.