Recent amendments to the Income Tax and the VAT legislations were recently voted by the House of Representatives, the summary of which are stated below.
INCOME TAX LAW
The House of Representatives has voted on 25 October 2012 to extend the law on special settlement of the tax liabilities up to and including the fiscal year 2008 until 31 December 2013.
The original law which has been published in the Official Government Gazette on 12 December 2011 and has provided for a flat penalty of 5% for settlement of tax liabilities for fiscal years up to and including 2008 on or before 31 March 2012. Any other penalties or interest which should be accrued on these tax liabilities were waived by the law. This law was subsequently extended up to 31 October 2012.
The extension in the law for settlement until 31 December 2013 was made in order to provide the ability to a greater number of tax payers owing tax liabilities up to 2008 to settle them without the imposition of penalties and interest which are much higher than a flat penalty of 5%.
The amendment in the law is valid from 1 November 2012 and extends the provision until 31 December 2013 and provides also for the following:
– An additional penalty of 1% is added to the previous month’s rate for every month of delay of settlement of tax liabilities starting from 1 November 2012 until 31 December 2013.
– From 1 April 2013 until 31 December 2013, the tax payers are given the right to pay the outstanding taxes by installment. The provision for the additional penalty is also applicable in this case.
The House of Representatives has voted on 19 October 2012 a law in relation to payment of VAT refunds by the Government to the VAT payers which amends the existing applicable law on VAT refund.
Under this law, a VAT payer who has submitted a valid application for VAT refund and the payment has been delayed by the Government for more than 4 months from the date of application, then the VAT payer will entitle to interest together with the refunded amount which is calculated from the date following the completion of the 4 months provided that the delay is not the fault of the VAT payer.
In the case of investigation by the VAT authorities which is related to the application for VAT refund, then the period of VAT refund is extended from 4 to 8 months. The interest is currently 5% per annum.
The law will come into effect 4 months after the publication of the law to the Official Government Gazette and applies for VAT periods after entry of the law into force.
Please feel free to contact our office in the case you need any clarifications in relation to the recent amendments in the legislations and we would be glad to assist you.