TaxLegi 31.10.2024

Ηow come we keep hearing about carbon taxation and Cyprus?

Carbon taxation as one of the most challenging but streamlined types of taxation which is initially proposed for the decarbonization and reduction of CO2 emissions, is requested to be implemented by Cyprus alongside with other member states of the European Union, according to the green targets of the European Commission for climate neutrality.

The International Monetary Fund (IMF) with its publicized report on the global economy and its future prospects, calls on governments, including Cyprus, to take integrated policy actions as soon as possible for a faster green transition.

Which are the green practises for green tax transition?

The green tax transition will bring Cyprus closer to its emission reduction targets, by reducing consumption of carbon and carbon-intensive goods and switching to low-carbon technologies, which affects the elasticity of demand for emissions.

Some of the most recommended green practices which are acquired for ensuring a climate resilience include cross-border carbon pricing mechanisms, reduction of investment in fossil fuels, subsidies of renewable energy sources with high fiscal costs, infrastructure in areas vulnerable to climate shocks, adoption of insurance policies for climate risks and both adaptation and mitigation in low-income countries are considered to be.

Cyprus is obliged to reduce its energy footprint decisively and encourage the use of these new green initiatives as well as substitute the existing fossil fuels to the new environmentally friendly ones, endeavouring to avoid or at least limiting any consequences it will have on its economy and on its other domestic sectors.

What are the consequences?

For Cyprus, the effects that will be caused as consequences of the implementation of carbon taxation are mainly the below:

• Reduction in revenue from VAT, fuel taxes and carbon taxation will occur due to elevated carbon prices as there is a reduction in demand for carbon-intensive goods and services.
• Temporary effect on aggregate demand that depends on the cyclical position of the economy, the overall fiscal stance and how the associated tax revenues are used.
• Adjustment costs associated with a change in carbon prices, as households and businesses switch to cleaner fuels or technologies.
• New technological innovations, large-scale infrastructure developments and the spread of emission-efficient goods and services.

It is also important to offset the impact of consumption on low-income groups for a fairer climate transition.

By:

Era Xenofontos

On 25 October 2024, the Tax Department issued a letter informing taxpayers that the deadline for the submission of the Income Tax Return (Form T.D.4) by persons with an obligation to submit a Summary Information Table of intercompany transactions (“SIT”) for the years 2022 and 2023 is extended as follows:

• For the tax year 2022 the submission of Form T.D.4 and SIT, by 28 February 2025;
• For the tax year 2023 the submission of Form T.D. 4 and SIT, by 30 November 2025.

Our team remains at your disposal for any information and/or clarifications required.

By:

Charalambos Palaontas Partner | Head of Transfer Pricing Services

Τhe Tax Department issued an announcement extending the deadline for the electronic submission of personal income tax returns and the settlement of the relevant income tax liability for the tax year 2023.

The announcement was published in the website of the Tax Department on  30 October 2024. The announcement provides that the deadline for the electronic submission of the 2023 personal income tax return (Form T.D.1) for employees and pensioners, whose total gross annual income exceeds €19.500, is extended from 31 October 2024 to 30 November 2024. The extension also applies for the payment of the relevant income tax due (if any), as per the submitted return, by way of self-assessment.

Additionally, the deadline for the electronic submission of the 2023 income tax return for self-employed persons (Form T.D.1 self-employed) with turnover below EUR 70,000 and who do not have the obligation to submit audited accounts, is extended from 31 October 2024 to 30 November 2024. The extension also applies for the payment of the relevant income tax due (if any), as per the submitted return, by way of self-assessment.

EY Cyprus is at your disposal for any information and/or clarifications required.

By:

Glykeria Terpizi

With just 10 weeks before the Digital Operational Resilience Act (DORA) becomes applicable to credit and payment institutions, electronic money institutions, investment firms, other financial entities, and ICT third-party service providers, all such firms must ensure they are aligned with its framework. Here below is an outline of the said framework and the respective firms’ obligations.

A.      What is DORA?

DORA is a pivotal European Regulation establishing a harmonized framework, pursuant to which financial institutions must have the appropriate internal infrastructure to exchange information, monitor and respond to ICT threats and ensure that disruptions are pre-empted and avoided to the extent possible.

B.      What does the DORA framework include?

The core elements of this Regulation include:

a)      A suitable governance and organization structure, with identified officers responsible for mapping a digital operational resilience strategy, establishing policies, defining clear responsibilities and creating appropriate reporting channels.

b)      ICT risk management procedures and tools to protect information and ICT assets, which must be regularly tested and reviewed. Such procedures and tools must exist both internally, as well as in third-party service providers.

c)      Appropriate and proportionate methods of detecting, managing and notifying ICT-related incidents, which must be developed while high-impact incidents must be swiftly reported to the appropriate regulator of the financial entity.

d)      A digital operational resilience testing program on a risk-based strategy to examine firms’ readiness to handle ICT-related incidents and identify shortcomings, which must be improved.

e)      Reporting to the regulator the ICT-third party service providers and any risk associated with such outsourcing, and effectively monitoring and managing such risks.

C.      Who is responsible for DORA implementation?

The main responsibility lies with the executive members of firms. As such, senior officers holding executive positions are accountable for the organization meeting its regulatory obligations.

D.      Who regulates DORA compliance?

The respective regulators, which predominantly include the Central Bank of Cyprus, and the Cyprus Securities and Exchange Commission are entrusted with supervision, investigation and sanctioning non-compliant entities obliged to have the DORA framework implemented within their firm and operations.

E.      Remarks - next steps

The obligation of firms to maintain a secure and uninterrupted platform of operation is not new. The new element in this necessity is for firms to ensure their robust digital operational resilience is evident throughout.

Our regulatory experts will be glad to support firms in reviewing their governance structure, policies, detection and response mechanisms, and their contracts with clients, suppliers and ICT-outsourcing entities, to confirm their readiness and compliance with the DORA Regulation.

By:

Elina Iosifidou     

Andria Koukounis