Income Tax – amendments


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.


Tax neutrality of foreign exchange differences (realized and unrealized)

The law is amended with a retrospective effect, therefore as from 1 January 2015, any exchange differences, both gains and losses, irrespective of whether they are realized or unrealized, are no longer taxable/tax deductible. This is irrespective of the purpose for which this exchange difference relates to (trading or non-trading nature).

This does not apply for Companies trading in foreign currencies and related products. Such companies may irrevocably elect not to be taxed on unrealized foreign exchange differences but instead to be taxed only on the realized foreign exchange differences, provided that the income tax return for the year 2015 is submitted within the statutory deadline.

The amendment is effective from 1 January 2015 and onwards.

Extension of increased annual allowances for capital expenditure

The increased annual allowance rate of 7% for industrial and hotel buildings (instead of 4%) and 20% for plant and machineries (instead of 10%) is now extended for expenditures incurred in the years 2015 and 2016 (applies from the year 2012).

Fees for issuing certificates / rulings

The Council of Ministers now have the right to issue an administrative fee to fix the amount of fees to be paid to the Tax Commissioner for the issue of the tax residency certificates and for the issue of the tax rulings.

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