Also in the news...
Prove your English language abilities with a secure English language test (SELT)
For visa or citizenship applications, you may need to prove your knowledge of English by passing a secure English language test (SELT).
UK and Nigeria Enhanced Trade and Investment Partnership arrangement
The Enhanced Trade and Investment Partnership (ETIP) sets out the UK and Nigeria’s priorities for future discussion and cooperation.
Export to the UK: guidance for African businesses
Find out about UK markets and sectors, trade agreements, UK import regulations and taxes, and support for African businesses from the UK government.
Guidance Start exporting to Africa
Find out about market opportunities, trade partnership agreements, support from the UK government, and export regulations and taxes in African countries.
Guidance Start investing in African businesses
Find out about investment opportunities and support from the UK government. Learn how to manage risk, invest ethically, and access guidance on African countries.
Cyprus - Tax Treatment of Non-Refundable Capital Contributions
Through Interpretative Circular 25 (the “Circular”), released on 3 September 2018, the Cyprus Tax Department clarifies the tax treatment of non-refundable capital contributions (i.e. when a capital contribution is made to a company without any issue of shares in exchange) by Cyprus taxpayers (the “Contributor”) to companies, which are tax resident abroad.
The Circular provides that article 33 of the Income Tax Law (covering related party transactions and their adjustment to an arm’s length basis) does not apply to debit or credit balances generated by non-refundable capital contributions in favour of non-Cyprus tax resident companies (the “Recipient”), provided that the following conditions are cumulatively satisfied and backed with supporting evidence:
· the Contributor has no legal right to request repayment of the contribution;
· the repayment of the contribution is validly made by the reduction of capital or through dissolution or liquidation of the Recipient, as per the provisions of the legislation applicable in the Recipient’s jurisdiction, or the Contributor provides satisfactory evidence that the said law does not require a formal reduction of capital in the relevant jurisdiction, if this is the case;
· the repayment takes place not earlier than 2 years from the end of the tax year in which the capital contribution was made;
· the Contributor has a direct interest in the Recipient’s capital; and
· the Recipient is not entitled to tax relief in its jurisdiction for deemed costs arising as a consequence of non-refundable capital contributions.
Non-refundable capital contributions meeting the requirements above are not eligible for any tax relief in Cyprus, and are subject to disallowance of direct and apportioned expenses, particularly for what concerns the deduction from taxable income of costs of investment in innovative enterprises and the notional interest deduction. Furthermore, no deduction is allowed on the costs of financing non-refundable capital contributions.
The Circular applies retroactively with effect from 1 January 2017 to non-refundable capital contributions in existence as at that date and those created thereafter. Any existing advance tax rulings covering, exclusively or partly, non-refundable capital contributions, which are not in line with the provisions of the Circular become void for what concerns their provisions on this topic.