Monday, 17 July 2017 15:39

Procedure for Settlement of Overdue Taxation Law

The law Regulating the Settlement of Overdue Taxes passed on 3 July 2017 provides for the procedure for settling Οverdue Τax payments. The law also provides information on the procedure and the years in which settlement and discounts are applied.

The scope of the law includes the following laws:

• Income Tax Law
• Special Contribution for the Defense Law
• Immovable Property Tax Law
• Capital Gains Tax Law
• Inheritance Tax Law
• Special Contribution for Employed, Retired and Self-Employed in the Private Sector Law
• Stamp Duties Law
• Value Added Tax Law (V.A.T.)

Submission of application for Regulation of the Debt Settlement Scheme:

Applications should be submitted through a specific web application or in the District Offices of the Department of Taxation within 3 months from 3 July 2017. For tax liabilities assessed after 3 July 2017, the submission deadline is 3 months from the day the related tax liability.

Tax liabilities subject to Regulation are as follows:

1. All taxes in arrears up to and including 2015 which at the date of their application becomes due, are certified and presented by the Tax Department as payable. This is done regardless of how they have been assessed either by court order or by agreement with the Department of Taxation.
2. Amounts due with the submission of self-assessment forms (relating to tax years up to 2015) where the tax returns for the relevant tax year have already been submitted, but without settlement of the liability.
3. The tax liabilities which are assessed after the effective day of this law, which refer to the tax year obligations until 2015.

Instalments, exemptions and additional regulatory penalties:

Interest and fines will be exempted depending on the number of desired instalments, with maximum number of installments being 60. Instalments and related percentages are shown in the table below:

Number of Instalments (%) Of Exemption
1 (Full settlement) 95%
2-8 90%
9-15 85%
16-21 80%
22-28 75%
29-35 70%
36-42 65%
43-49 60%
50-56 55%
57-60 50%


Overdue taxes which are included in the arrangement are not charged with any other penalties or late payment interest.

Taxpayers wishing to get the 95% exception are not required to register into the system, but may pay directly to the local district income tax offices by submitting the specific form IT2005E/2017.

Termination of a Regulation Settlement scheme:

Termination of the arrangement entails immediate direct payment of the balance of the debt and the direct pursuit of receipt. The arrangement is terminated if the taxpayer:

1. Fails to submit the income tax return and VAT statements during the settlement scheme.
2. Fails to settle a liability that relates to a period after the 31st December 2015.
3. Delays to pay any 3 instalments.
4. Delays to pay a specific instalment beyond 3 months, including the month for which the instalment should have been paid.

Various other provisions:

1. The taxpayer has the right to object in case there is a disagreement with the Tax Commissioner’s decision, justifying and accompanying the objection it with the necessary documents. The Commissioner's answer must be given within 30 days.
2. If the taxpayer is under a criminal prosecution and is applying for regulation settlement scheme which is approved, the Commissioner informs the Attorney General for the purpose of suspending criminal prosecution.

Date of entry into force:

The law enters into force on 3 July 2017 and the existing disclosure is valid from the date of publication to the official Gazette of the Republic of Cyprus.

Reanda Cyprus Limited

Our firm can provide such services on behalf of taxpayer in order to register to the online system and arrange for the procedure for settlement of overdue taxes. Get in touch with us for more details.