Every employer must withhold tax from the salary of employees each month and pay it the Inland Revenue Department by the end of next month. The standard I.R 61 form (Monthly Statement of Withholding Tax) is completed for the payment.
At the beginning of the year all employees must submit to their employer a statement of the deductions claimed (I.R 59), in order to calculate the tax that should be excluded. The employer is obliged to submit the Employer’s return (I.R7) until April, 30th of the following year. On the statement of the employer, the data are completed regarding each employee who was in the service of the employer during the year, including those on a part-time basis or contractual basis regardless of the amount of pay, pensioners, members of the administrative board, the secretary or other officials. For each person declared, the following information are provided:
■ Taxpayer Identification Number (where TIN is not available, an identifier must be submited)
■ Identifier (passport, identity card, alien TIN, No. Social Security Number. Drivers License)
■ Full name and home address
■ The remuneration in respect of the services provided.
The official entry of an employee, is not allowed more than once. In case of re-hiring, it is stated as below:
■ Date of hiring is considered the first intake of the employee in 2010.
■ If the employee was not employed in the specific work environment during the 31/12/2010, date of departure is set as the last day of employment.
■ No departure date is set if the employee works or was working in the specific work environment on the 31/12/2010.
The Inland Revenue Department has proceeded to arrangements regarding the employers’ statements for the year 2010. The Employer’s Return form (I.R7) will be submitted only by employers who occupy up to 2 employees (including directors). Employers who employ more than 2 employees, must submit the statement with digital media (floppy disc or CD-ROM) accompanied by the signed, relevant paper declaration. Employers who employ up to 3,000 employees may use the excel file type located on the Department’s website (http://www.mof.gov.cy.ird). After completion of this file, they may transfer it on digital media.
In the event that the employer is a business, the statement shall be prepared and signed by the director, advisor, partner or attorney representative as long as they have a fiscal record.
Failure to pay the tax until the specified date, the following is imposed:
■ Interest at a rate of 5.35% (5% from 1.1.2011) per year, one month after the end of the month in which was withheld.
■ 1% surcharge for each month of delay in payment, with no maximum limit, until amortization of the amount due.
