Constantinos Christofi January 18 2019 New tax exemptions and allowances for film and audiovisual production industry Elias Neocleous & Co LLC | Corporate Tax - Cyprus Constantinos Christofi Corporate Tax In September 2017 the government approved an initiative to encourage the development of the film and audiovisual production industry in Cyprus by means of grants, tax incentives and other assistance.The Income Tax Law was amended on 11 December 2018 by Law 139(I) 2018, which provides tax exemption of income from the production of films and audiovisual media in accordance with the government's programme.The amending law adds a new sub-paragraph to Article 8 of the Income Tax Law, providing up to 50% exemption of income derived from the production of films, series and other relevant audiovisual programmes as described in the government programme. The deduction is limited to 35% of the eligible costs approved by the competent authority implementing the programme. Any restriction on the exemption resulting from the limitation to 35% of costs can be recovered over the next five years. No exemption is available if the taxpayer has received a grant under the programme.In addition, small enterprises as defined in Article 17 of EU Regulation 651/2014 may claim an annual deduction of 20% of the cost of cinematographic infrastructure and technological equipment, provided that it is used in Cyprus for at least five years. Medium-sized enterprises may claim an annual deduction of 10% of such costs.For further information on this topic please contact Constantinos Christofi at Elias Neocleous & Co LLC by telephone (+357 25 110 110) or email ([email protected]). The Elias Neocleous & Co LLC website can be accessed at www.neo.law.