Hitherto, taxpayers who disputed VAT assessments raised following examinations of their records have had three options:
- to submit a written objection to the Commissioner of Taxes within 60 days of receiving the assessment, under article 51A of the VAT Law;
- to submit a written objection to the Minister of Finance within the same time limit, under article 53 of the VAT Law; or
- to file an application to the Supreme Court of Cyprus within 75 days of receiving the assessment for review of the decision under article 164 of the constitution. Taxpayers who initially submitted an objection to the Commissioner of Taxes or the Minister of Finance could also file an application to the Supreme Court for review of their decision.
The VAT Amendment Law of 2017 (Law 86(I)/2017) amends the procedures and transfers responsibility for determination of taxpayers’ objections on VAT matters to the independent Tax Tribunal established under articles 4A and 20A of the Assessment and Collection of Taxes Law (Law 4/1978 as amended) and to the recently-established Administrative Court. The taxpayer still has the right of recourse to the Supreme Court if dissatisfied with the decision of the Tax Tribunal or the Administrative Court. The new procedures apply from July 7, 2017.
Appeals to the Tax Tribunal must be filed within 45 days from the notification to the taxable person of the relevant decision or act of the Commissioner of Taxes. The Tax Tribunal may allow an extension of this time if there is reasonable cause, such as the applicant’s illness or absence overseas.
In order for the Tax Tribunal to consider an appeal, the applicant must have:
- submitted the necessary documents and evidence to substantiate the merits of the appeal;
- submitted all the required tax returns and paid the amounts indicated in these statements as payable or made a settlement with respect to them; and
- paid any undisputed amount or provided appropriate security if required.
Appeals should be concluded as expeditiously as possible, and the Tax Tribunal is required to issue its decision not later than one year after the submission of the appeal. The Tribunal may wholly or partially uphold or reverse the original decision, amend it, issue a new decision to replace the original decision or remit the case to the Commissioner of Taxes with instructions to him to undertake specific actions.
A taxpayer who is dissatisfied with a decision of the Tax Tribunal may submit an appeal to the Administrative Court. Any appeal must be lodged within 42 days of the decision of the Tribunal.
The amendments to the law align the procedures for resolution of VAT disputes with those for other taxes, and ensure that disputes are settled by an independent body, whether the Tax Tribunal or the court. They are a further step in the modernisation of the Tax Department’s procedures.