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Greek tax on Cyprus abolished

19/08/2015 10:27
By intervention of the international creditors, the cross-border tax withholding which was established with a legislation by the Greek Parliament last March causing a stir to Greek and Cypriot businessmen, has been abolished.

With the third memorandum, the Greek government is forced to change the procedures so that the Greek state does not withhold a 26% tax for countries with “privileged tax regime” in which Cyprus was included.

With the new provision set as a prerequisite by the institutions, the Greek authorities abolish the cross-border tax withholding thus reversing the recent amendments of the law and returning to the status that existed before March 2015.

This development seems to satisfy the business community of Cyprus and especially the audit firms which had to carry out complex procedures in trade issues with Greece.

The abolition of the relevant provision of the law is contained on page 1016 of the updated memorandum and published in the Official Gazette of the Hellenic Republic.

Under the relevant provision of the loan agreement, the Greek government is committed to a reform of the law as a prerequisite for abolishing the cross-border tax that amounted to 26%.

The demand of the institutions to abolish cross-border tax withholding was raised as the international creditors realized that it entails unnecessary costs for the Greek state with disproportionate revenue.

According to the law that had been amended in March, any company that bought products or fuel or raw materials from a company located in Cyprus, Bulgaria, Qatar or Ireland, countries which have a preferential tax regime and which have a tax rate below 13%, should pay tax of 26% on the expenditure.