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CYPRUS VALUE ADDED TAX (VAT)

CYPRUS VALUE ADDED TAX (VAT)

Value Added Tax (VAT) is an indirect tax imposed on the consumption of goods and services. VAT is an essential component of any national economy as it is a significant source of revenue. Cyprus has a value-added tax (VAT) system that is in line with the European Union’s (EU) regulations. It is a consumption-based tax, and as such, it is imposed on the consumption of goods and services in the country.

Cyprus VAT is imposed on goods and services that are supplied within Cyprus, regardless of where they originate from globally. It is also imposed on goods imported from outside the European Union. The standard rate of VAT in Cyprus is currently 19%, and this applies to most goods and services. However, some goods and services attract a reduced VAT rate of 5% or are exempt from VAT.

The reduced VAT rate of 5% applies to goods and services such as books, newspapers, and magazines, medicines, medical equipment, and transport services. On the other hand, goods and services that are exempt from VAT in Cyprus include education and sports services, financial services, and certain land transactions. It is worth noting that under certain circumstances, goods and services that are currently exempt may become subject to VAT in the future.

If a business in Cyprus supplies goods and services that are VAT-chargeable or qualifies for VAT registration, it is required to register for VAT with the Cyprus Tax Department. This registration allows the business to charge VAT on sales and, in turn, claim back VAT paid to suppliers.

VAT returns must be submitted to the Tax Department on a regular basis. Cyprus businesses with a turnover greater than EUR15,600 must submit VAT returns on a quarterly basis, while those with a turnover greater than EUR70,000 must submit them bi-monthly. Returns must be submitted electronically, and a penalty may be imposed for late submission or incorrect information.

It is crucial to ensure that you comply with Cyprus VAT obligations when operating a business in the country. Failure to comply with VAT requirements can result in severe penalties, including fines, interest charges, or even criminal prosecution.

In conclusion, value-added tax (VAT) is an essential component of Cyprus’s economy, and it is essential to comply with the country’s VAT regulations. Cyprus VAT is imposed on goods and services supplied within the country, and there are reduced rates and exemptions available. VAT registration is mandatory for businesses that supply VAT-chargeable goods and services, and VAT returns must be submitted regularly. Compliance with VAT obligations is essential, as non-compliance can result in significant penalties.

The above article is provided only for information purposes. It should not be consider as a professional advice. We recommend you to ask for a professional advice before acting on any information provided.  Should you require a professional advice please contact us at info@elaaccounting.com or call us at (+357 99 832578).

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