Cyprus parliament has approved a range of tax amendments. These amendmentds form part of a package of measures to improve the attractiveness of Cyprus to foreign investors and foreign businesses. The government hopes that these changes will maintain Cyprus, as the EU member state with the lowest tax rates, business friendly and open to further investments.
The package of measures introduces new rules for the taxation of income from intellectual property rights, increases capital allowances for certain categories of fixed assets and, subject to certain conditions, allows for the deduction of interest expenses related to acquisition of shares.
Additionally, the deemed distribution rules have been amended so as to encourage investments and discourage distribution of dividends.
Finally, the VAT law has been amended so as to encourage the acquisition of residential property in the Republic of individuals who are not residing in Cyprus. The reduced VAT rate of 5% on the sale or construction of residential real property now applies to non-residents as well. Previous provisions suspending the payment of land registry fees in certain cases have also been extended to 31 December 2012.
The tax amendments will take effect from the 1st January 2012.
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