The Law in relation to the special settlement of tax liabilities, which was published in the Official Gazette on 12 December 2011, provides for the imposition of a flat charge of 5% on taxes due for tax years up to and including 2008, as long as the repayment was effected prior to 30 March 2012. Any other penalties or interest accruing on these taxes imposed are waived (http://www.httaudit.com.cy/index.php/component/k2/item/39-interest-and-penalties-on-tax-liability). Subsequently, the law was amended and an extension was provided until the 31 October 2012 (http://www.httaudit.com.cy/index.php/component/k2/item/54-extension-of-deadlines-for-tax-settlement-and-returns’-submission).

The Cyprus House of Representatives voted on 25 October 2012 an amendment to extend the deadline for settlement till 31 December 2013 with the following additional provisions:

- The penalty rate will be increased by 1% for each month of delay following 31 October 2012. For example, a taxpayer that will settle his liabilities in December 2013 will suffer a total charge of 19%.
- The tax payers are given the option of settlement via installments commencing from 1 April 2013.