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Value Added Tax (Amendment) (No2) Law of 2011, VAT (Tax Refunds to Persons in the Countries of the European Union) (Amendment) Regulations of 2011
05.04.2011
Area(s) of Practice: Taxation Law

Value Added Tax (Amendment) (No2) Law of 2011 - "Value Added Tax (Exemptions on Imported Goods) *(Amendment) Regulations of 2011" - "Value Added Tax (Special Exemptions) (Amendment) Regulations of 2011":

The purpose of the above mentioned VAT legislative package, which was approved on 10 March 2011, is to amend the respective basic VAT Law and Regulations, in order to:
(a) be clarified that the special scheme, with regard to the supply of gas and electricity, applies to imports and supplies of gas through any natural gas system situated within the territory of the EU or any network connected to such system;
(b) apply a VAT exemption with regard to transactions of bodies set up by the European Communities;
(c) provide for an adjustment t a tax deduction system, so as to take into account changes in the business and non-business use of the property/goods concerned.
The said Law and Regulations harmonise Cyprus VAT legislation with the provisions of “EU Directive 2009/162 amending various provisions of Directive 2006/112/EC on the common system of value added tax “.

"VAT (Tax Refunds to Persons in the Countries of the European Union) (Amendment) Regulations of 2011".

The purpose of the “VAT (Tax Refunds to Persons in the Countries of the European Union) (Amendment) Regulations of 2011”, also approved on 10 March 2011, is to harmonise Cyprus VAT legislation with “EU Directive 2010/66 amending Directive 2008/9/EC laying down detailed rules for the refund of value added tax, to taxable persons not established in the Member State of refund but established in another Member State”. According to the provisions of the said Regulations, refund applications which are related to refund periods in 2009 shall be submitted to the member state of establishment on 31 March 2011 at the latest. This amendment was introduced because of a number of serious delays and certain technical problems  affecting the development and operation of the electronic portals in a limited number of Member States, which prevented the timely submission of certain refund applications. Pursuant to Directive 2008/9/EC, refund applications are to be submitted to the Member State at the latest on 30 September of the calendar year following the refund period. Given that deadline, and the inoperability of some of the electronic portals, some taxable persons were unable to exercise their right to deduct VAT on expenses incurred in 2009. The deadline was therefore exceptionally extended to 31 March 2011 for applications relating to refund periods in 2009.

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