On the 15th of March 2020, the Cyprus Government has announced financial measures of €700 million to support and safeguard Businesses and Labour after Coronavirus outbreak. The first package of the budgetary support will have two pillars; the one will aim to impact the net financial position of Cyprus (€450 million will be attributed) and the second will aim to enhance the business liquidity over the next 2 months (€250 million will be attributed).
A. Direct Tax Measures
Extension of Tax Returns Submission
Extension by two months of the deadline for the submission of the Tax Returns. Tax Returns can be submitted by the end of May 2020, instead of end of March 2020.
B. Indirect Tax (VAT) Measures Reduction of VAT rates
Temporary reduction of VAT rates from 19% to 17% for a period of two months (1 April 2020 – 31 May 2020) and from 9% to 7% (rates applicable to hotels, similar accommodation services, restau- rants, domestic passenger transport) for a period of three and a half months (1 April 2020 – 15 July 2020). The measure will be applicable from 1st of April 2020, provided the relevant legislation is enacted.
Suspension of VAT payments
Temporary suspension of the VAT payments for two months, without the imposition of any interest and penalties. The measure aims to enhance the business liquidity and will be applicable to com- panies whose turnover was less than €1 million, according to the tax declarations submitted in 2019 and businesses whose turnover dropped by more than 25%. Arrangements will be made for the VAT to be gradually paid off until the 11th November 2020.
Extension of VAT Returns Submission
Extension of the deadline for the submission of the VAT returns of the quarter ending 29 February 2020 by the end of April 2020. This applies to companies with a turnover of not more than €1 million and provided that their relevant VAT liability will be settled not later than the 10th of November 2020.
BUSINESS SUPPORT MEASURES
A. Small Business
For small business that employ up to 5 people, the measures provide for a 70% subsidy of the salary of each employee, provided that will retain their employees at work and their turnover has been reduced by more than 25%.
B. Business Suspension Plan
For businesses that had to suspend their operations and for businesses that will continue to operate but will suffer a turnover decline of over 25%, Business Suspension Plan shall apply, aiming to avoid layoffs, while at the same offer to the affected workers an unemployment allowance for as long as their employer suspends its operations.
BANKING SUPPORT MEASURES
European Central Bank considers the introduction of measures for the support of bank lending among with the Cyprus Central Bank. Cyprus financial institutions will be able to obtain liquidity from the Eurosystem on favourable terms. The measures considered by the Europan Central Bank include, inter alia, the release of capital stocks, which for the Cyprus systemic banks are estimated to be in excess of €1.3 billion. In addition, the Cyprus Central Bank is considering further local measures that will be announced in due course.
GENERAL HEALTHCARE SYSTEM MEASURES
The implementation of the second phase of the General Health Scheme (scheduled to start on the 31st March 2020) is postponed for two months. Therefore, the increase in special contribution to the Cyprus Healthcare System by employees and employers is expected to apply from June 2020 onwards.
SPECIAL LEAVE MEASURES
A. Parental leave
This measure provides for the supply of special leave to parents working on the private sector to take care of children to 15 years of age due to suspension of attendance at public and private schools, nursery and childcare centres. The special leave is granted to one of the two parents and can last up to four weeks. A benefit will be given for a salary up to €2.500 and it will be calculated as follows: 60% allowance will be paid for the first €1.000, and for the next €1.000 of his/her salary, a 40% allowance will be paid (increased for single parent families).
B. Sickness Leave
A benefit on average of €800 per month will be available to persons that have to take leave from their employment, in line with the guidelines issued by the Cyprus Government. The measure will be also available for self-employed individuals.
SOCIAL INSURANCE MEASURES
Extension by one month of the deadline for the submission of an objection, in relation to the insurable earnings from 31 March to 30 April 2020 is granted to self-employed individuals. The measure will be applicable immediately after the relevant legislation is enacted.
OVERSEAS STUDENTS MEASURES
A benefit for students who will remain abroad during the Easter holidays will be granted, amounting to €750 per student.
Feel free to contacts us if you wish to have a deeper discussion on how this development might affect you or your business.
Our company has decided to remain operational and continue to serve our clients in addressing and overcoming any business challenges that may come along from this unprecedented situation.