Tax Certificate – obtaining rules

REQUIREMENTS FOR OBTAINING TAX CERTIFICATE

On 10th of December 2015, the House of Representatives voted a number of significant tax law amendments that were published in the Government Gazette on 17 December 2015.

Changes to the Requirements for Obtaining Tax Certificate

The tax commissioner changed the requirements for issuance of tax residency certificate and is requesting a questionnaire to be completed (called Form T.D. 98). This form requires a greater piece of information supporting the fact that the Company is managed and controlled in Cyprus.

In general a Company is a Cyprus tax resident if it is managed and controlled in Cyprus. Even if there is no formal definition of management and control, the following factors should be satisfied:

  1. The majority of directors should reside in Cyprus.
  2. The majority of the board meetings should be kept in Cyprus with relevant minutesprepared and kept in Cyprus.
  3. The key management and commercial decisions necessary for the Company’s operations as well as the general policies are taken by the board of directors exercising their functions in Cyprus.
  4. The books and records are maintained in Cyprus.
  5. The agreements and contracts are executed and signed in Cyprus.

The questionnaire is designed specifically on the above factors and is coming a step forward asking information regarding General Powers of Attorney. The risk of General Power of Attorney is that the Attorney operates and acts on behalf of the Company in his/her country and is giving written instructions to the directors in the form of orders rather than suggestions. Therefore it is recommended from now onwards to issue Special Powers of Attorney.

In the case of any questions please do not hesitate to contact our office.

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