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The Commissioner of Taxation has issued on Friday 23 June 2017 the Decree regarding the Procedure for Settlement of Overdue Taxes (in instalments) Law (the Law) of 2017.

The main provisions of the Decree are the following:

Date the Law enters into force: 3 July 2017

Application for regulating tax liabilities

  • The application has to be made within three months from the date the Law enters into force. If tax assessment has already been issued or within 3 months from the date of issue of tax assessment if it is done after 3.7.2017, provided the Law is still in force
  • If tax assessment is not issued despite the filing of the tax return, it is possible to submit application based on self assessment.
  • The application is made electronically through a specified web application (Government Gateway Portal – Ariadne).

 

Tax obligations that can enter under the regulation

  • Overdue taxes already assessed by the Tax Department as at the date of the application and relating to years up to 31 December 2015.
  • Tax liabilities being payable through filing of self-assessments for years up to 31 December 2015, provided the taxpayers have already submitted the relevant tax returns.
  • Tax liabilities assessed by the Commissioner of Taxation after the date the Law enters into force, relating to years up to 31 December 2015.

It is noted that in this case, the application for regulation is done within a period of three months from the date the liability becomes overdue.

Installments and exemption from interest and penalties

  • Payment with one installments – exemption 95%.
  • 2-8 monthly instilments – exemption 90%
  • 9-15 monthly installments – exemption 85%
  • 16-21 monthly instilments – exemption 80%
  • 22-28 monthly installments – exemption 75%
  • 29-35 monthly installments – exemption 70%
  • 36-42 monthly installments – exemption 65%
  • 43-49 monthly installments – exemption 60%
  • 50-56 monthly installments – exemption 55%
  • 57-60 monthly installments – exemption 50%

Settlement of installments

The settlement of the installments will be effected through the banks with the use of a unique code of payments or in some cases through the Tax Department.

Cancellation of the regulation

The regulation is automatically cancelled and the tax liabilities are reverting to their original assessment (incl. interest and penalties) in the following cases:

  • if the taxpayer, during the regulation period, fails to submit his tax and vat returns as these are required by the relevant tax deadlines or,
  • if the taxpayer fails to settle any new tax liabilities relating to years after the period ending 31 December 2015 or,
  • Delays in paying the specific installments for three consecutive months or
  • Delays in paying a specific installment for more than three months, including the month in which the installment becomes payable.

Conclusion

The new law offers very good opportunity to clients who have outstanding tax obligations for the period up to 31/12/2015 either due to financial difficulties or due to delay in the preparation of the Financial Statements and filing of tax returns to repay them and avoid penalties and interest already imposed, especially in the case of settlement in one payment.

For more information Contact us.

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