1. GENERAL COUNTRY INFORMATION
2. FOREIGN INVESTMENT POLICY
3. INCENTIVES FOR INVESTORS
4. PROCEDURES FOR INVESTORS
5. TAX RATES
6. FREE PORT AND ZONE
7. PROCEDURES FOR THE ESTABLISHMENT OF AN INTERNATIONAL BUSINESS COMPANY AND MAIN INCENTIVES
8. PROCEDURES FOR THE ESTABLISHMENT OF A BANK
9. PROCEDURES FOR THE ESTABLISHMENT OF AN OFFSHORE  BANK AND MAIN INCENTIVES

5. TAX RATES
5.1. Personal Income Tax and Corporation Tax
All companies and other corporate bodies, except cooperative societies, are chargeable with
Corporation Tax.
Corporations which are registered in the state as "Local Companies" are chargeable with 10%
tax on chargeable income.
Corporations which are "Foreign Companies" whether registered in the state or not, are also
chargeable at the rate of 10% on chargeable income derived from trade or other income in the TRNC.
A corporation is "Locally Registered Company" in the case where the central management and control
of its business is in the TRNC. For tax purposes, all profits of such companies, including profits from

other countries are liable to Corporation Tax, but for the avoidance of double taxation a set off for
similar tax paid abroad is allowed.
Corporation Tax is paid in two instalments; 31st May and 31st October of each year.
In addition to the Corporation Tax liability the corporations which are specified under the
Corporations Tax Law have to withhold income tax at source at a standard rate of 15% on the net
chargeable income after corporation tax is deduced. Companies (registered in the state) engaged in
education and health facilities and engaged in industrial activities in the regions approved by the
council of Ministers, withhold income tax according to the Undistributed Profit/Paid Up Capital ratio
(This ratio must not exceed the standard rate).
Foreigners operating in the field of transportation, including corporations, shall not be subject to
withholding tax on taxable income to be ascertained under the provisions of the Corporation Tax Law
and the Income Tax Law.
Income tax is levied on income accrued in, derived from or received in the TRNC. For permanent
residents income arising within or outside the TRNC is subject to income tax, but for the avoidance of
double taxation a set off for income tax paid abroad is allowed.
Before income tax is charged, allowances granted to individuals under Income Tax Law are as
follows;
• Contributions to Social Security Funds
• Personal Allowance
• Earned Income Allowance (20% for employees- 10% for self-employed)
• Wife Allowance
• Child Allowance
• Disability Allowance
• Old Age Allowance (for the individuals who are at the age of 65 and over)
Individuals are liable to income tax under a progressive tax system. The personal income tax is levied
at the statutory rates ranging from 10% to 40%.
5.2. Value Added Tax
Value Added Tax was introduced in 1996 as a Consumption Tax. Six VAT rates are applied in
accordance with VAT rates regulation. Applied VAT rates are: 0%, 3%, 5%, 10%, 15% and 20%.