Parliament grants further payment extension for VAT amounts suspended as part of Covid 19 business cashflow relief measures.

On 30 October 2020 Parliament passed amending law 147(1)/2020 relating to the due date for payments of VAT which had, under measures introduced in March 2020, been deferred until 10 November 2020.

The law relates to VAT payable which arose for VAT periods ending on 29 February 2020, 31 March 2020 and 30 April 2020.  Under the March VAT amendment eligible businesses (those with an annual turnover of less than Euro 1 million and those whose turnover was reduced by more than 25% as a consequence of Covid 19 impacts) were, provided they submitted their VAT return on or before the due date, allowed to defer paying any associated VAT due until, at the latest, 10 November 2020.  The measure was intended to assist with the liquidity crisis that many businesses were experiencing because of government introduced Covid 19 restrictions. The October amendment, however, recognizes that the impact on businesses of dealing with the pandemic has been greater than originally anticipated.  VAT associated with the aforementioned  return periods may now be paid in six equal installments on the 10th day of each month.  The first installment must be paid by 10 November 2020 and the last by 10 April 2020.  Businesses may opt to repay in a smaller number of installments over a shorter period, however, the minimum payment size is one sixth of the total amount of VAT due.

It should be noted that businesses which opt to take advantage of the deferred payment scheme will not be subject to additional tax or interest payments provided they submitted the original VAT return by the due date.  VAT payable for periods other than those specifically included in law 147(1)/2020 may not be deferred.

For more information on current VAT measures please speak with our Tax department or, if you have concerns re the liquidity of your business please speak with our Corporate and Commercial Department.  You may, of course, also  always address any queries or concerns that you may with your usual contact at Elias Neocleous & Co LLC.