Goods supplied Duty-free to Offshore Companies and their expatriate Personnel

The purpose of this Notice is to familiarise offshore enterprises and their expatriate personnel with the legal provisions under which duty-free facilities are extended, and the Customs procedures and terms and conditions which apply:

1. Legal Provisions

The concessions in terms of relief from import and excise duties available to offshore enterprises and their expatriate personnel are incorporated in sub-heading 18 of item D1 of the Fourth Schedule to the Customs and Excise Duties Law, which reads as follows:

'Motor vehicles of Tariff Heading 87.03 21-24 and 87.03 31-33 and 87.03.90, office equipment and household effects, but excluding furniture, imported by offshore companies or their expatriate personnel.

For the purposes of this item an offshore company is regarded any company or enterprise which is engaged exclusively with activities outside the Republic and maintains an office in the Republic.

It should be noted that the above goods are not relieved from the payment of the Temporary Refugees' Levy.

2. Persons eligible

Eligible for relief are:

(a) Offshore enterprises, i.e. companies, branches or partnerships which -

1. have permission from the Central Bank of Cyprus under the Exchange Control Law to engage in activities outside the Republic and continue to carry on such activities and
2. maintain continuously proper office in the Republic in suitable distinct premises, not as part of a dwelling house, with normal office facilities and employ personnel on a full-time basis;

(b) full-time expatriate employees of Offshore enterprises, as described above, who live and work in Cyprus under Temporary Residence Employment (TRE) Permit in accordance with the Aliens and Migration Law and Regulations. However, cases where the expatriates salary and expenditure In Cyprus are less than CYP6,000.- per annum are not considered as prima facie genuine and the expatriate may not be considered eligible for duty-free benefits. The sum of L6,000.- may be reviewed annually according to fluctuations in the cost of living.

3. Goods falling within the scope of the relief and quantities

Relief from duty is granted only in respect of reasonable quantities of goods as follows which are necessary for the administration of the offshore enterprise or the residence of its expatriate staff.

(a) Office Equipment

Offshore enterprises may obtain relief on office equipment, i.e. supplies of a durable nature, such as photocopiers, typewriters, calculating machines and computers. They may not obtain relief on household articles as in (b) hereunder, for furnishing their offices but they may import or acquire locally such goods under item 01.18 for the exclusive use of their approved expatriate employees in their dwelling houses. Moreover, relief is not afforded in respect of replacement parts, air-conditioners and goods of a consumable nature, such as stationery.

(b) Household equipment

Expatriate employees of offshore enterprises may obtain relief an household equipment, a term which is taken to mean the following durable articles:

One T,V. set, one Video Tape Recorder. one Audio Tape Recorder, one HI-FI system, one Radio Receiver, one Clothes Washing Machine, one Dish Washer, one Refrigerator, one Cooker (gas or electric) and reasonable quantity of carpets (not fitted).

Relief is not afforded in respect of consumable goods, air-conditioners end personal articles such as photographic or video cameras.

Furniture is explicitly excluded from the relief; thus, all items of Tariff Headings 94.01 and 94.03, such as chairs, tables, desks, bookcases, wardrobes, beds, serving trolleys, stands and filing cabinets standing on the floor, are liable to payment of duty.

(c) Motor Vehicles

An offshore enterprise is allowed to clear in its own name a duty-free car if it proves either that:

1. such car is strictly necessary for the purposes of the enterprise, or that -
2. such car is to be used by or allocated to a full-time member of its expatriate staff who is eligible to take such duty-free car but has not done so.

Thus, an offshore enterprise described in 2(a) above may clear in its own name only as many duty-free cars as it has expatriate employees described in 2(b) above who have not taken personal advantage of this benefit. In the case of a reduction in the number of its expatriated staff the offshore enterprise is required to reduce accordingly the number of its duty-free care within six months by placing them in bond or by otherwise disposing of them.

Every expatriate described in 2(b) above is eligible to clear In his name only one duty-free car provided that he has not been allocated another duty-free car by the offshore enterprise which employs him.

Eligible expatriate employees, accompanied by their family, may get a second duty-free car for the use of their family provided that the expenditure in Cyprus of the expatriate justifies the use of such second car. For the time being, where the annual expenditure of such family is less than CYP 10.000,00, this concession is not normally allowed.

A duty-free car shall be driven by the expatriate owner or, if in the name of the enterprise, by the expatriate employee to whom it has been allocated or by members of the immediate family (wife and children) of such expatriate or, on specific permission by the Director, by a professional driver who is employed on a full-time basis by the offshore enterprise.

Eligible offshore enterprises and eligible expatriate employees may be relieved from the payment of duties on brand new or used motor vehicles of Tariff Heading 89.02.11 which includes 'jeep' and 'land rover' type and similar vehicles, and of Tariff Heading 87.02.19, which includes saloon cars, station wagons, sports cars and mini buses for the transport of up to nine seated persons. Motor cycles, buses, coaches and caravans are not eligible for relief.

4. Establishment of status and approval of eligibility

To establish their status, interested offshore enterprises should apply to the Director of Customs, Nicosia, in writing, producing along with their application the following documents:-

1. The permit from the Central Bank of Cyprus for the incorporation of the company or partnership or the establishment of a branch office in Cyprus,
2. Certificate of Incorporation or Registration issued by the Registrar of Companies;
3. Certificate showing the Directors and Secretary issued by the Registrar of Companies;
4. Certificate as to the registered office of the enterprise;
5. Tenancy agreement or contract in respect of the premises used as its office;
6. A statement on the prescribed form showing particulars of the enterprise, its expatriate personnel and of the Cypriot employees;
7. An undertaking, signed by a person binding the enterprise, to pay to, the Customs Authorities any sums which may become payable in the form of duties or penalties through the act or omission of the enterprise or its employees in respect of goods relieved under item 01.18; and
8. The Temporary Residence Permits, Forms M.62 of the expatriate personnel.

The proper officer from Customs Headquarters will inspect the office of the enterprises and, if satisfied, will issue a letter confirming entitlement to relief of the enterprise and of those of its expatriate employees who fulfil the requirements as In 2(b) above.

After the original approval of the enterprise and its expatriate employees, the proper officer from the Customs Headquarters, or any Customs Officer with appropriate instructions, may visit the enterprise's office at subsequent times for the purpose of verifying its continued eligibility to relief and its compliance with its obligations as regards the goods obtained without payment of duties.

5. Customs clearance procedure of goods eligible for relief

Goods eligible for relief may be brought into the Republic directly by the beneficiaries or acquired locally from traders who keep duty-free stocks. Goods imported under the temporary admission procedure will also be eligible provided a disposal permit is secured from Customs Headquarters.

Clearances will be made under Form C.2 or, if ex warehouse, under Form C.43 in both cases supported by a claim for relief on Form C.6. The entry will be endorsed with the reference number of the letter of entitlement. However, on each occasion the relevant claim for relief on Form C.6, duly completed, should first be produced in duplicate to the proper officer at Customs Headquarters for checking and approval, after which the original thereof will be returned for presentation with the clearance entry.

Unregistered brand-new motor vehicles may also be bought from duty-paid stacks In the hands of dealers, the duties being refundable to the dealer on application for refund made on Form F.46A. In such cases the claim for refund of the duties will be supported by an appropriate claim for relief on Form G.6, which had been previously approved as aforesaid.

6. Conditions to be observed

The following conditions are to be complied with in relation to any goods in respect of which payment of duties has not been required under item 01.18, namely:

1. the goods shall always be in the possession and use of the beneficiaries
2. the goods shall not be or be offered, exposed or advertised to be, lent hired, pledged, given away, exchanged, sold or otherwise disposed of in the Republic; provided that such goods may be transferred to other persons entitled to relief under item 01.18, or to non-entitled persons on payment of the duties involved, if the beneficiary secures a disposal permit from the proper officer at Customs Headquarters;
3. motor vehicles shall be reported to the Deputy Registrar of Motor Vehicles within 15 days after clearance for registration and circulation licensing;
4. all goods, when exported, shall be properly declared and entered on an export entry Form C.32 stating whether the exportation is permanent or temporary;

Failure to observe any of the above conditions may cause inconvenience and may be attended with heavy penalties under the Law.

It is emphasised that the right to eligibility for duty-free goods continues to be enjoyed for as long as the circumstances under which the offshore enterprise and its expatriate employees were approved, exist and provided that the above-stated conditions are complied with.

7. Relief under other Legal Provisions

The relief under item 01.18 does not prejudice the entitlement of any person to relief under other provisions of the Law. Thus, an expatriate employee or members of his family may claim relief in respect of their used personal and household effects as intending residents under Schedule 4 to the Customs Duty (Personal Relief Order, 1973).

8. Additional Information

For any further information regarding the application of this relief, interested persons are advised to write to the Director, Department of Customs and Excise, Nicosia, or to communicate with the proper officer at Customs Headquarters, Nicosia.

Notice No. 41 (Revised)

MINISTRY OF FINANCE CUSTOMS AND EXCISE HEADQUARTERS
NICOSIA

May 1986