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control is exercised in the Republic and «non-resident or resident
outside the Republic» shall be construed accordingly:

Provided that the presence of an individual in the Republic for part
of a day shall be counted as one day;

«securities» means shares, bonds, debentures, founders' shares and
other securities of companies or other legal persons, incorporated
under a law in the Republic or abroad and options thereon;

«Sovereign Base Area» means the Akrotiri Sovereign Base Area
and the Dhekelia Sovereign Base Area, as defined in Article 1 of the
Treaty concerning the Establishment of the Republic of Cyprus,
signed at Nicosia on the 16th day of August, 1960;

«tax» means the tax imposed by this Law;

«year of assessment» means the period of twelve months
commencing on the first day of January in each year.



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PART II

ADMINISTRATIVE APPLICATION OF THE LAW



3. (1)
Commissioner of For the due administration of this Law the Director shall be
Income Tax.
the Commissioner of Income Tax who shall do all such acts as he
may deem necessary or expedient for the purpose of carrying into
effect the provisions of this Law.

(2) The exercise of powers and duties relating to the administration
of this Law may be delegated by the Commissioner to any other
Officer or Officers of the Department of Inland Revenue.

4. (1) Every individual having any official duty or being
Official secrecy.
employed in the administration of this Law shall regard and deal with
the information and all documents, returns and assessment lists
relating to the income of any person as secret and confidential and
shall make and subscribe a declaration to that effect in a form
prescribed before a Judge of a District Court.

(2) An individual having information or possessing or having
control over or access to any document, return or assessment list
relating to the income of any other person shall not at any time
communicate or attempt to communicate such information or
anything contained in such document, return or list otherwise than
for the purposes of this Law:

Provided that the Minister of Finance may for the public interest
authorize any such information or anything contained in any such
document, return or list to be communicated to such person or
persons as he shall specify.




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PART III

IMPOSITION OF TAX


Charge of Tax. 5. (1) Subject to the provisions of this Law, in the case of a
person who is resident in the Republic, tax shall be charged at the
rate or rates specified hereinafter for each year of assessment upon
the income accruing or arising from sources both within and outside
the Republic, in respect of-

(a) any profits or other benefits from any business, for whatever
period of time such business may have been carried on or
exercised;

(b) any profits or other benefits from any office or employment,
including the estimated annual value of any quarters or board
or residence or of any other allowance granted in respect of
office or employment, whether in money or otherwise, to the
individual providing the salaried services or to any member of
his family;

(c) any dividend, interest or discount;

(d) any pension, charge or annuity;

(e) any rents, royalties, remuneration or other profits arising from
property, including the value of the benefit derived by the
owner of land from the erection thereon at the expense of the
tenant of any structure or from any addition or alteration or
both made to any structure, building or works at the expense of
the tenant, where any such structure, addition or alteration shall
upon the termination of the tenancy become the property of
the owner, the value of such benefit being determined by the
Commissioner in the year of erection, addition or alteration,
the deductions provided by section 10 being, mutatis mutandis,
allowed as in such section provided and regard being had to all
the circumstances of the case:




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Provided that the value of such benefit shall -

(i) not be taken to exceed the cost of such erection, addition
or alteration;

(ii) be spread evenly by the Commissioner over the period of
the tenancy; but in the event of the owner parting with the
land or structure or building or works before the lapse of
such period, the unassessed balance of such benefit as at
the date of the disposition of the land or structure or
building or works shall be treated as income of the year in
which the land or structure or building or works was
disposed of by the owner, or of that year and the preceding
five years or the actual years of tenancy whichever is the
smaller number of years;

(f) any amount or consideration in respect of any trade goodwill
reduced by any amount incurred for the purchasing of such
trade goodwill;

(2) Subject to the provisions of this Law, in the case of a person who
is not a resident in the Republic, tax shall be charged at the rate or
rates specified hereinafter for each year of assessment, upon the
income accruing or arising from sources in the Republic only, in
respect of -
(a) any profits or other benefits from a permanent establishment
situated in the Republic:

Provided that the profits or benefits from the business of
operating ships or aircraft in respect of fares or freight for
passengers or goods or mails shipped in the Republic shall be
subject to tax, irrespective of the existence or not of a
permanent establishment in the Republic;

(b) profits or other benefits from any office or employment
exercised in the Republic, including the estimated annual value
of any quarters, board or residence or of any other allowance
granted in respect of office or employment, whether in money
or otherwise, to the individual providing the salaried services or



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to any member of his family:

Provided that members of the Public Service of the Republic
and employees of public corporate bodies thereof serving
abroad are deemed to be exercising their employment in the
Republic;

(c) pensions deriving from a past employment exercised in the
Republic, charge or annuity directly or indirectly borne by a
resident in the Republic, with the exception of any pension paid
by, or out of funds created by, the Government of the Republic
or a local authority thereof;

(d) income falling within paragraph (e) of sub-section (1);

(e) any amount or consideration in respect of any trade goodwill
reduced by any amount incurred for the purchasing of such
trade goodwill;

(f) notwithstanding the existence of a permanent establishment or
not, the gross income derived by an individual from the
exercise in the Republic of any profession or vocation, the
remuneration of public entertainers, and the gross receipts of
any theatrical or musical or other group of public entertainers,
including football clubs and other athletic missions from
abroad, derived from performances in the Republic

(3) For the purposes of this section, any receipts from the sale of
trees in respect of which a deduction has been allowed under section
9 or any compensation received or receivable under a policy of
insurance or otherwise in respect of damage to or destruction of
such trees, shall be deemed to be income liable to tax:

Provided that such tax shall be imposed on an amount not exceeding
the maximum of the deductions allowed up to the season in which
the trees started to yield or the maximum of the insurance premiums
paid, as the case may be.

(4) Persons having a permanent establishment situated in the
Republic may opt to be treated like a resident in the Republic.


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6. Tax shall be charged, levied and collected upon the chargeable
Basis of
assessment. income of any person derived in the year of assessment.

7. The accounts of persons exercising a business shall close on the
Special periods
last day of the year of assessment:
of assessment.
Provided that the Commissioner may permit that the accounts of a
business close on a date different than the last day of the year of
assessment, but in such a case the chargeable income based on the
income of the year ending on the same date is apportioned in the
year of assessment concerned, subject to such conditions as, in the
opinion of the Commissioner, may be just and reasonable.
8. There shall be exempt from the tax -
Exemptions.
(1) the official emoluments ”f the President of the Republic or the
officer performing the duties of the President of the Republic
during his absence;
(2) the pension granted to the President of the Republic upon his
49 of 1980
retirement from office under the provisions of the Pensions
46 of 1983
(Certain Office Holders of the Republic) Laws 1980 to 1996;
170 of 1986
130 of 1988
13 of 1989
136 of 1990
37 of 1991
63(I) of 1993
39(I) of 1996
47(I) of 1996.
(3) that part of the pension granted to the President of the House
of Representatives upon his retirement from office under the
provisions of the Pensions (Certain Office Holders of the
Republic) Laws 1980 to 1996, which is calculated on the basis
of the representation allowance;
(4) any other benefit or allowance granted to the President of the
Republic and the President of the House of Representatives
upon his retirement from office under the Benefits (President
131 of 1988
and Vice-President of the Republic, President and Vice-
12 0f 1989
President of the House of Representatives) Laws of 1988 to
1989;
(5) the representation allowance to the Ministers, the President of



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the House of Representatives and the members thereof;
(6) the special allowance for service abroad granted to members of
the Public Service of the Republic, or to an employee of a
public corporate body, provided the Minister of Finance
certifies that such allowance is granted to such members as
compensation in respect of the extra expenditure such
members have to incur by reason of their having to live away
from Cyprus for the performance of their duties:
Provided that the amount of the allowance to an employee of a
public corporate body does not exceed the corresponding
allowance to a member of the Public Service of the Republic;
(7) the pensions and special grants made under the Relief of
114(I) of 1988
Suffered Laws of 1988 to 2001;
64(I) of 1994
108(I)of 1998
129(I) of 2001


(8) the widows™ pensions granted under the Social Insurance Laws
41 of 1980
of 1980 to 2002 or in accordance with any pension scheme
48 of 1982
approved under regulations;
11 of 1983
7 of 1984
10 of 1985
116 of 1985
4 of 1987
199 of 1987
214 of 1987
68 of 1988
96 of 1989
136 of 1989
17 of 1990
218 of 1991
98(π) of 1992
64(π) of 1993
18(π) of 1995
55(π) of 1996
87(π) of 1997
80(π) of 1998
84(π) of 1998
55(π) of 1999
98(π) of 2000
99(π) of 2000


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2(π) of 2001
51(π) of 2001
135(π) of 2001
143(π) of 2001
71(π) of 2002.
(9) any lump sum received by way of retiring gratuity,
commutation of pension, death gratuity or as consolidated
compensation for death or bodily injury;
(10) the income arising from a scholarship, exhibition, bursary or
any other similar educational endowment held by an individual
receiving full-time instruction at a university, college, school or
other recognized establishment;
(11) capital sums accruing to individuals from any payments which
are allowable deductions under section 14;
(12) the emoluments of foreign officers of an institution exercising
an educational, cultural or scientific function, if the Minister of
Finance is satisfied that the public interest is best served by this
exemption;
(13) the income of any religious, charitable or educational institution
of a public character;
(14) the income of any registered co-operative society or any co-
operative savings bank in respect of transactions with its
members;
(15) the income of any local authority where such income is not
derived from any business carried on by the local authority;
(16) the income of any fund falling within sub-section (3) of
section 14;
(17) subject to such conditions as the Council of Ministers may
impose, the income of any company formed exclusively for the
purpose of promoting art, science or sport, not involving the
acquisition of gain by such company or by its individual
members and whose activities are confined solely to that
purpose;
(18) the emoluments of foreign diplomatic and consular
representatives, if not citizens of the Republic, who in
accordance with the rules and principles of International Law
enjoy diplomatic immunity on the basis of reciprocity;


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(19) the whole income of an individual from interest and fifty per
cent (50%) of income of a company from interest:
Provided that interest accruing to any person from the ordinary
carrying on of any business, including any interest closely
connected with the ordinary carrying on of the business, is
deemed not to be interest for the purposes of this sub-section;
(20) any income from dividends;
(21) twenty per cent (20%) of the remuneration from any office or
employment exercised in the Republic by an individual who was
resident outside the Republic before the commencement of his
employment, or í5.000, whichever is the lower. This exemption
applies for a period of three years commencing from the 1st
January following the year of commencement of the
employment;
(22) profit from the sale of securities.


Deductions 9. (1) Subject to the provisions of sub-section (2), for the purpose
of ascertaining the chargeable income of any person there shall be
allowed.
deducted all outgoings and expenses wholly and exclusively incurred
by such person in the production of the income, including-

(a) any sum expended either for the repair of premises, plant,
machinery and means of transport or for the renewal, repair or
alteration of any implement, utensil or article, employed in
acquiring the income;

(b) ordinary annual contributions paid by an employer to an
approved fund pursuant to sub-section (3) of section 14;

(c) bad debts of bany business proved to the satisfaction of the
Commissioner to have become bad debts during the year of
assessment and actually written off during the same year
notwithstanding that such bad debts were due and payable prior
to the commencement of the said year, and also the amount of
any specific provision for doubtful debts in respect of which the
Commissioner is satisfied that they have or will eventually

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