S.C.Audit Ltd | News

11
Mar

Standard for Automatic Exchange of Financial Information in Tax Matters (CRS)

Background:

For many years’ countries around the world have been engaging in the automatic exchange of information in order to tackle offshore tax evasion and other forms of non- compliance. After the OECD report to the G20 in Los Gabos CRS is widely practiced and is very effective tool to counter tax evasion and to increase voluntary tax compliance.

CRS can compare as FATCA of other countries than USA. For this reason if you are not USA citizen or you are not USA tax payer, offshore USA company ( ex-Delaware) will be very attractive. Please note that the Law is new to everyone and we do speculations to the Law. My decision was based on the table I state below.

How is work:

The reciprocal automatic exchange framework:

Standard for Automatic Exchange of Financial Information in Tax Matters. table

 

Which companies and What is Reportable:

For Cyprus Companies with bank accounts in Cyprus (reporting institution Cyprus Banks):

Companies with Active Income are NOT reportable. The definition of the active income has to do with regular business activities than the ones but not limited to Passive Incomes.

Companies with Passive Income are reportable. Passive Income are Dividends received, Bank Interest received, Rent Income Received, Royalties

From Wikipedia the definition of the Passive income is as follows:

Some examples of passive income are:

 

In Cyprus if the company has as business trading of shares and stocks then such income does not qualify as Passive. The same applies for companies that loan and receive loans. Also for companies that Royalties is the main income does not qualify as passive income.

Standard for Automatic Exchange of Financial Information in Tax Matters.table2

17
Nov

Cyprus the”New Monaco”

Cyprus government amends the tax legislation in a way to attract International Businesses and High Net Worth individuals.

The changes:

For Individuals

  • Provide Income Tax exemptions for senior employees relocating in Cyprus. Actually in an extension of the current legislation for another 5 years over €100.000 Gross Salary’s employees / directors and another 2 years for the 20% deduction on Gross Salary.
  • Offer planning advantages to High Net Worth Individuals (HNWI) residing or considering residing in Cyprus through the introduction of ‘’non-domicile’’ status.
  • Reduce the cost of investing in Cyprus Real Estate (which is related to VIP citizen scheme/Cyprus passport).

For Cyprus Companies

  • Extend considerable tax incentives that create new equity share capital. Reduction of the corporation tax from 12.5% up to 2.5%.

Summary of Changes

For Individuals

  • Currently any employee relocated to Cyprus or received a job to Cyprus can take the advantage of 50% deductions on his Gross Salary for 5 years starting employment after the year 2012 can be extended another 5 years. In addition, for any employee relocated to Cyprus or received a job to Cyprus any salary, can take the advantage of a tax credit of 20% on Gross Salary for 3 years. The law extended for another 2 years. Note that employee cannot take advantage both incentives.
  • Tax exemption for ‘’Non-Domicile’’ Cyprus tax resident. Any individual is considered as ‘’Domicile in Cyprus’’ either by i) domicile of origin, or ii) domicile of choice, as defined by the Wills and Succession Law. The law changes to accommodate HNWI for residing in Cyprus more than 183 days, but they choose not to be treated as ‘’Domiciled in Cyprus’’ for special contribution of Defense law in Dividends and Interests received (50c tax).In common language, individuals will stay and enjoy Cyprus but will pay no tax or Dividends or Interest received around the world. SDC tax currently is payable on dividends (17%), interest revived (30%) and rental income (3% on 75% of gross rentals). All the above rates for ‘’Non – Domicile’’ will be zero.
  • Any purchase done of Real Estate for the period 16/7/2015 up to 31/12/2016 will be except for Capital Gain Tax (CGT). The exception does not apply if it is a sale of shares of Cyprus Company holding Real Estate. Also does not apply if purchased made by way of donation, gift or exchange of properties. CGT applies to properties sold that was bought for private use or rental properties and hold by Individuals for long period of time. Currently CGT office estimates the period to be more than 2-3 years depended on the situation. We would like to advice you for this matter based on case by case.

For Cyprus Companies

Introduction of National Interest Deduction (NID) or Equity.

With retrospective effect from 1 January 2015, Cyprus tax resident companies that create ‘’new equity’’ will be able to clearing NID of up to 80% of their taxable income reducing the overall effective tax rate to as low as 2.5% from 12.5% regular rate. The NID will remove any distortions between equity and debt financing by bringing equity and debt into acceptable levels of other Tax Jurisdiction Parties. For example in Russian tax authorities not accepting the concept of Back to back loan and tax request with holdings interest paid to Cyprus Company. The Russian Tax office will consider that CyCo is not the final receiver of the interest and not accept that interest paid applies based on DTT. NID is a good vehicle to escape for such structure and received the same advantage.

31
Jul

Tax Amendments – Modivations

The House of Representatives voted on July all the tax law amendments as have been announced at the beginning of the month by Finance Minister. Read more

5
Sep

Cyprus Ideal IP Location

Cyprus introduced new rules on taxation of income from intangible assets which are commonly referred as “Intellectual Property (IP)”. These rules are effective as of 1 January 2012.

Cyprus as an EU Member State has domestic laws which govern IP and are based on English Law. Furthermore, any European Laws related to IP are applicable. Cyprus is signatory of various international conventions – such as the Paris Convention for the protection of Industrial Property – as it has ratified the Treaty and Regulations of the World Intellectuals Property Organization (WIPO), Trademark Law Treaty etc.

Read more

30
May

New criteria for optain Cyprus Citizenship

There are various ways that a non-Cypriot citizen can acquire Cyprus citizenship as per the new regulations that have been issued by the Council of Ministers on 19-3-14. A person, who meets, among others, one of the following economic criteria, either personally or through a company/ companies in which he/ she participates as a shareholder – proportionally based on the percentage of participation, or even as a high-ranking senior manager of a company/ companies that meets one of economic criteria, may apply for the acquisition of the Cypriot citizenship through Naturalization by exception.

Read more

24
Mar

Tax Diary 2014

At the end of each month the following payments must be made

  • Payment of PAYE tax and Special Contribution that is deducted from employees’ salary must be paid to the income tax at the end of the following month. The payment includes both taxes.
  • Payment of the Special Contribution for Defense withheld on previous month’s payments of dividends, interest or rents (when the tenant is a company, partnership, the state or local authority) made to Cyprus Tax residents in the preceding month.
  • Payment of Social Insurance Contributions and Deductions to the Social Insurance department for the employees.
  • Payment of tax withheld in the preceding month on payments to non-Cyprus residents.

Read more

10
Jan

Law amendments 2014

As from January 2014 there are three major amendments to Social Insurance, Special Contribution Tax and VAT Law. More detailed the changes for each government sector are as below:

Social Insurance

As of 1stof January 2014 the rates of Social Insurance for employees, employers and self-employees are increasing.
For employees and employers the rate of Social Insurance contributions is increasing by 2% and from 13.6% that was contributed from both parties equally until December 2013 (6.8% deducted from employee and 6.8% contributed from employer) the rate is modified to 15.6% (7.8% deducted from employee and 7.8% contributed from employer). The new rate is applicable until December 2018. Read more

8
Aug

Seychelles companies (IBC) are required to keep proper accounting records

As of 27th of December 2011 all Seychelles companies are required to keep proper accounting records:

  • that are sufficient to show and correctly explain the IBC’s transactions;
  • to enable the financial position of the International Business Company to be determined with reasonable accuracy at any time; and
  • to enable the accounts of the IBC to be prepared.

Read more

6
Aug

New record-keeping requirements for BVI bussiness companies

In November 2012 the BVI enacted new record-keeping requirements for BVI Business Companies and Partnerships to comply with OECD recommendations. These new requirements are in addition to existing record-keeping obligations contained in the BVI Business Companies Act, 2004 (“BCA”) and effects ALL companiesalready registered under the BCA, as well as new companies.

BVI companies are now required to maintain and keep records and underlying documentation for a period of at least 5 years from the date of completion of the transaction or the termination of the business relationship to which they relate. Read more

10
Jul

Immovable Property Tax 2013

The House of Representatives voted recently the amendment of the Immovable Property Tax Law.  More detailed from 1st of January 2013 the Tax rates calculated based on the market value of the Immovable Property are:
Read more