Legislation concerning Value Added Tax, in line with European directives, comes into force today within the framework of the acquis communautaire chapter on Taxation. The changes which will result from implementation of the new legislation include,

· The obligation for registration with the VAT department if the value of taxable turnover for a period of one year exceeds CYP 9.000 instead of CYP 12.000 previously.

· Management penalties are substantially reduced, for example, for late submission of tax returns – CYP 30.00 per month.

· Businesses trading with the European Union will be eligible to claim VAT paid abroad.

· Businesses trading in products with 0% factor, such as foodstuffs, are now obliged to register if their turnover exceeds CYP 9.000

Entities obliged to register under the new legislation must do so by the end of February 2002.