Cypriot employees will receive their first salaries under the country’s tax overhaul this month, as Parliament prepares bills to clarify the reform that took effect on 1 January and add new provisions including home renovation deductions and fines for cash rent payments.
All taxpayers who previously paid tax will see their income tax reduced, Tax Commissioner Sotiris Markides told the House Finance Committee on Monday. More than 10,000 people are attending seminars from mid-January at employer federations, business chambers and trade unions as the island adapts to the sweeping changes.
Parties are drafting bills to add primary residence renovations to tax deductions and impose administrative fines on landlords and tenants who fail to pay rent electronically or through banks.
The legislation will require taxpayers to have at least one dependent to claim tax deductions, a significant shift in eligibility rules. Children’s income will not count towards family income when parents claim relief.
Single-parent income ceilings for tax relief will rise from €40,000 to €50,000, whilst the bills will specify that gross family income includes state allowances and benefits, excluding child allowances, student grants and benefits for struggling families.
Markides said his department worked intensively since the bills’ approval to inform taxpayers of changes affecting individuals. “Every year there is an obligation for employees to inform employers of changes. This year the need is more intense, due to the major changes from the reform, so they can see the correct reduction in their taxation at the end of the month,” he said.
“It is clear that they will see a bigger salary, whether they manage to submit the TD59 form or not. The reform itself increased the tax-free amount and introduced more favourable scales,” Markides said.
A personal data issue with the TD59 form forced each taxpayer to calculate their own deductions. “We could not, for example, write ‘I am married and have this many children’ on the form. Each taxpayer is obliged to calculate their deductions,” Markides said.
The Tax Commissioner urged taxpayers to study the Tax Department’s explanatory guide on the changes.
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