Doing Business in Cyprus (UAE Edition)
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DOING BUSINESS C YPRUS<br />
79<br />
UNITED ARAB EMIRATES EDITION<br />
SUBMISSION OF TAX RETURNS<br />
The tax year is the calendar year. Tax on employment <strong>in</strong>come is withheld by the<br />
employer under the PAYE system and remitted to the tax authorities.<br />
Self-employed <strong>in</strong>dividuals pay tax through the provisional and self-assessment<br />
systems. Tax returns must be filed electronically by 31 st of July follow<strong>in</strong>g the tax year for<br />
employees, 30 th of September for self-employed persons who are not required to file<br />
audited/reviewed f<strong>in</strong>ancial statements and 31 st of March of the year follow<strong>in</strong>g the year<br />
under consideration (i.e. 15 months from the year-end) for self-employed persons whose<br />
returns are accompanied by audited/reviewed f<strong>in</strong>ancial statements. Sole proprietors with<br />
an annual turnover of more than €70,000 are obliged to prepare f<strong>in</strong>ancial statements<br />
that are either audited or are subject to a review by a statutory auditor (<strong>in</strong> case their<br />
net turnover does not exceed the amount of €200,000 and the total value of the assets<br />
without deduct<strong>in</strong>g liabilities does not exceed the amount of €500,000).<br />
Limassol Seafront<br />
VALUE ADDED TAX (VAT)<br />
Imposition of Value Added Tax (VAT) is imposed on the supply of all goods and services<br />
<strong>in</strong> <strong>Cyprus</strong>, on the acquisition of goods from other Member States and on the importation<br />
of goods from third countries. The standard rate of 19% applies to the supplies of all<br />
goods and services <strong>in</strong> <strong>Cyprus</strong> which are not subject to the zero rate, the reduced rates<br />
(5% and 9%) or are not exempt. <strong>Cyprus</strong> constitutes an attractive EU VAT jurisdiction<br />
apply<strong>in</strong>g several options permissible by the EU Directive among others a flexible VAT<br />
Group<strong>in</strong>g. As long as the pre-requisite l<strong>in</strong>ks are satisfied, and governmental revenues<br />
are not put <strong>in</strong>to jeopardy, related entities can form a VAT group disregard<strong>in</strong>g <strong>in</strong>tragroup<br />
transactions and hav<strong>in</strong>g a representative member submitt<strong>in</strong>g a s<strong>in</strong>gle VAT<br />
return. Even such entities not <strong>in</strong>corporated <strong>in</strong> <strong>Cyprus</strong> can form a VAT Group <strong>in</strong> case<br />
they are tax resident or possess<strong>in</strong>g an establishment <strong>in</strong> <strong>Cyprus</strong>.<br />
SPECIAL CONTRIBUTION FOR DEFENCE<br />
Special contribution for defence (SDC) is imposed on the dividend, <strong>in</strong>terest and rental<br />
<strong>in</strong>come earned by Cypriot tax resident and domiciled <strong>in</strong>dividuals. Non-domiciled<br />
Cypriot tax residents are exempt from SDC.
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