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Amendments to the Taxation of Intangible Assets
Cyprus introduced amendments as to the taxation of intangible assets
On 17 July 2020 the Cypriot House of Representatives has approved to amend the Section 9(1)(I) of the Income Tax Law with respect to the tax treatment of intangible assets. The amendment was published in the Government Gazette on 14 August 2020. The amendments relate to the termination of preparing balancing statement in case of disposal of the intangible asset and the tax treatment of the capital allowances.
No requirement to prepare balancing statement
Under the existing provisions a taxpayer was required to prepare a balancing statement in the case where an intangible asset was disposed. Under the new provision, there is no obligation to prepare a balancing statement on the disposal of an intangible asset. Therefore, no balancing addition or balancing deduction would be included in the taxpayer’s taxable income in the year of disposal.
Tax treatment of capital allowances
Under the existing provisions any expenditure incurred for the acquisition or development of an intangible asset, which is for capital nature, is allocated to the useful economic life of the intangible asset with a maximum period of 20 years. Under the new provision, the taxpayer has the option not to claim capital allowances each year. Moreover, any unclaimed capital allowances can be claimed in the forthcoming years over the remaining useful life of the intangible asset.
The above amendments are effective as from 1 January 2020.
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