VAT is an indirect form of taxation which burdens consumption expenditure. It is charged on every taxable supply of goods or services. It is collectable at every stage of the production. The standard rate is 15% with the reduced rate being 5%, 8% or 0%.
All transacting companies need to register for VAT to a local VAT office through the completion of VAT Form 101, which is the application for registration in the VAT Register, provided they exceed the threshold. After registration, companies are given a VAT number which they have to display on all transactions. People supplying goods and/or services are responsible for collecting the VAT and then passing it on at the VAT Service Department.
A taxable person is every person, natural or legal, resident in Cyprus or abroad, who carries on a business and has registered as such in the VAT Register or he is liable to be registered according to the provisions of the VAT legislation. Liability to register arises if at the end of any month, if the value of his taxable supplies in the period of one year then ending has exceeded € 15,600, or at any time, if there are reasonable grounds for believing that the value of his taxable supplies in the period of thirty days then beginning will exceed € 15,600. Persons who are liable to register have to notify the VAT Commissioner through VAT Form 101. Although liability to register for VAT falls on the businesses, it is not actually them who bear the cost. The seller only acts as a vehicle of the VAT Services to collect VAT from the consumers.
