The minister of finance recently announced that the statutory rate of interest on judgments pursuant to Article 33 of the Courts of Justice Law has been reduced to 2% per annum with effect from 1 January 2019. This rate will apply for the entirety of 2019.
Article 9(B) of the Income Tax Law 2002 (as amended) provides for a notional interest deduction for tax purposes on new equity capital injected into companies and permanent establishments of foreign companies on or after 1 January 2015 to finance business assets, calculated by applying a reference rate to the new equity. The Tax Department recently announced the 10-year government bond yields for 31 December 2018, which will be used as the basis for the notional interest deduction for the 2019 tax year.
The recent Ministerial Order on Safety Zones was published with the purpose of ensuring the safety of the Stena IceMax drillship and the safety of navigation during the period that it will be used to drill in the Cyprus Continental Shelf and exclusive economic zone. The order establishes a safety zone at a distance of 500 metres from the drillship. Unless a vessel has obtained the requisite licence from the Deputy Ministry of Shipping, it cannot (bar a few exceptions) enter, navigate or remain within the safety zone.
The Ministry of Finance recently announced that the double tax agreement with Saudi Arabia – which was signed on 3 January 2018 – will enter into force on 1 March 2019. The agreement will apply to amounts paid or credited on or after 1 January 2020 with regard to taxes withheld at source and to tax years beginning on or after 1 January 2020 with regard to other taxes.
The Deputy Ministry of Shipping (DMS) recently issued the 2016 Amendments to the Code of the Maritime Labour Convention. The amendments affect maritime labour certificates and declarations of maritime labour compliance. In this regard, the DMS has announced that existing certificates and declarations will remain valid until their expiry date.
Limitation periods in Cyprus were suspended for many years. However, in 2012 the Limitation of Actionable Rights Law was enacted to reintroduce time limits for the filing of civil claims. In a recent case, the District Court of Limassol held that the law on limitation periods, together with Article 30.2 of the Constitution, imposes specific time limits to ensure the rule of finality and distinguish between bona fide and mala fide civil and criminal procedures.
The Tax Department recently announced a time extension for banks and other financial institutions to submit their corporate tax returns for the 2017 tax year. Unlike other companies, which must submit their tax returns electronically, banks and other financial institutions must submit hard copy tax returns, giving additional details of their business, by the end of the year following the tax year in question.
The Merchant Shipping (Fees and Taxing Provisions) Law 2010 requires that, in order to qualify for the tonnage tax scheme, EU-flagged ships must account for at least a specified minimum percentage of the taxpayer's fleet. The Deputy Ministry of Shipping recently announced the outcome of its review of companies that entered the tonnage tax system between 1 January 2015 and 1 January 2016.
The Supreme Court recently upheld a lower court's decision to dismiss an appellant's claim in first-instance proceedings. The claimant had been the only witness in her case, but – after failing to attend the hearing on the appointed date – had requested an adjournment of the case through her lawyers on the grounds that she was unable to attend due to absence abroad for health reasons. The defendant's lawyer had not initially objected to the proposal to adjourn.
The Income Tax Law was recently amended to provide an exemption of up to 50% for income derived from the production of films, series and other relevant audiovisual media. In addition, small enterprises may claim an annual deduction of 20% of the cost of cinematographic infrastructure and technological equipment, provided that it has been used in Cyprus for at least five years.
The Tax Department recently announced that the procedures for ratifying the protocol amending the Convention on the Avoidance of Double Taxation between Cyprus and San Marino have been completed. The protocol, which entered into force on 27 June 2018, replaces the text of Article 25 of the convention with the text of the corresponding article of the Organisation for Economic Cooperation and Development Model Convention 2014.
The Tax Department recently announced that constituent entities of Cyprus ultimate parent entities (UPEs) will not be subject to local filing in their jurisdiction of tax residence, provided that the tax information exchange arrangement under the Common Reporting Standard Multilateral Competent Authority Agreement has been activated. Further, local filing will not apply to Cyprus-resident constituent entities which have no Cyprus tax resident UPEs.
The Cyprus Tax Department recently announced that the procedures for ratification of the protocol dated 23 October 2017 amending the Convention on the Avoidance of Double Taxation between Cyprus and Mauritius have been completed, and that the protocol entered into force on 2 May 2018. The protocol replaces the text of Article 27 of the convention with the text of the corresponding article of the Organisation for Economic Cooperation and Development Model Convention 2014.
The Merchant Shipping (Fees and Taxing Provisions) Law 2010 imposes a surcharge on the tonnage tax payable on qualifying vessels registered in countries which appear on the 'grey list' or 'black list' of the Paris Memorandum of Understanding. On the basis of the 2017 annual report of the Paris Memorandum of Understanding, the Deputy Ministry of Shipping has determined a list of flags that are included in the relevant grey or black list for the purposes of calculating tonnage tax for 2018.
The Cyprus Tax Department recently published for consultation draft legislation to implement the EU Tax Dispute Resolution Mechanisms Directive. The draft legislation comprises an amending law, which adds two new articles to the Income Tax Law 2002 and regulations to be issued under the second of those articles. The new law is intended to take effect from 1 July 2019.
The Supreme Court recently issued an innovative judgment relating to Norwich Pharmacal orders which demonstrates the Cyprus courts' readiness to stay abreast of technological developments. The claimant alleged that he was the victim of fraud and conspiracy in connection with online foreign currency trading. The Supreme Court upheld the first-instance decision to appoint an independent computer expert who would provide the technical expertise required to implement the order for disclosure of the information.
Cyprus is one of the world's most important locations for ship management, with approximately 60 ship management companies operating in its territory. Since 2009 the Central Bank of Cyprus's statistics department has carried out semi-annual market surveys which collect data on the financial transactions between Cyprus's resident ship management companies and non-residents of Cyprus. The most recent survey, which covers the first half of 2018, was published on 1 November 2018.
The Cyprus Administrative Court recently resolved the question of to which extent, if any, an action of a contracting authority can modify the published terms of the competition in a public procurement process. The court rejected the recourse filed by the applicant, which had sought to annul the decision of the Municipality of Limassol, as contracting authority, to award the contract to another tenderer.
EU Regulation 655/2014 recently established a European Account Preservation Order procedure to facilitate cross-border debt recovery. In Cyprus, claimants must file an application for such an order at the district court with jurisdiction over the main dispute. The Cyprus courts have always required appropriate security to be provided for freezing orders and are likely to adopt a conservative approach to prevent abuse of the procedure. It is hoped that the courts of other member states will also adopt a balanced approach.
The Deputy Ministry of Shipping recently announced that the International Convention for the Control and Management of Ships' Ballast Water and Sediments will enter into force in Cyprus on 8 November 2018. The Cyprus shipping authorities will apply the requirements of the convention to ships that fly the flag of a country which is not a party to the convention to the extent necessary to ensure that they are not treated more favourably than ships flying the flag of parties to the convention.