On 18 June 2021, the Council of Ministers exercising its powers under the Assessment and Collection of Taxes Laws of 1978 to (No. 3) of 2021, issued a Decree imposing the obligation to accept payment means by card on certain categories of businesses which carry out economic activities in Cyprus.
The main purpose of the implementation of this measure is to assist combat tax evasion, safeguard public revenues and strengthen citizen protection.
Categories of business which are subject to the obligation
The categories of the businesses which are obliged to comply with this obligation are listed in the annex of the aforesaid Decree.
The list consists of 87 different categories of businesses which are obliged to accept ways of payment by card. What is notable, however, is that it includes certain categories of businesses which did not traditionally accept payment by card, such as law firms, accountants, architects, schools, betting shops, etc.
POS and Online Payments
The Decree determines that the terms ‘POS’ (Point Of Sales) terminals and ‘card-based payment means’ for the purposes of the imposed obligation, include devices such as wired and wireless POS terminals, mobile POS terminals, methods and applications such as virtual POS terminals which can be used for the acceptance of cards, with and without the physical presence of a card, meaning distance sales.
Specifically, for the term ‘card-based payment means’, the Decree specifically refers to the definition provided under the Regulation (EE) 2015/751, which interprets the term as ‘any payment instrument, including a card, mobile phone, computer or any other technological device containing the appropriate payment application which enables the payer to initiate a card-based payment transaction’.
The Decree also refers to technical means which can be used for the acceptance of cards, including ways without physical presence of a card and distance sales, arguably suggesting that the availability of an online payment system, such as Paypal, Google Pay, Apple Pay, etc, may qualify as “accepting payment means by card” for the purposes of the Decree,
However, the TAX Department has considered it necessary to clarify whether the possession of a POS terminal device is mandatory by issuing an Enforcement Directive on 04 August 2021 (No. 20/2021), under the same law.
The Enforcement Directive 20/2021 clarifies that all businesses which exercise economic activities and are listed in the Annex of the Decree, are obliged to maintain POS terminal devices at all cash desks and to have relevant signs prominently displayed in the entrance and at the cash desks, by the deadline stipulated in the Decree.
Businesses are required to comply with the Decree within 3 months from the date of its publication.
Newly established businesses which will begin their operation after 2 months from the date that the Decree was published, are required to comply with it within 4 four months from the date of its publication.
Business which will begin their operation after the expiration of the abovementioned deadline, will be required to comply with the obligations imposed by the Decree within 1 month from the date of their operation.
Non-compliance with the obligation imposed by the Decree
Non-compliance with the provisions of the Decree is subject to an administrative fine of up to EUR 2.000.
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