Higher rate General Health Service (GHS) contributions reinstated from 1 July 2020

Whilst the Cyprus economy begins to emerge from its Covid 19 induced shutdown, one temporary measure introduced to ease the cashflow burden on businesses and individuals at the height of the pandemic, is due to lapse today, 30 June 2020. It is unlikely to be renewed.   The measure relates to an increase in levels of GHS contributions for all segments of society.  The increase was originally legislated to come into full effect from 1 March 2020.  The purpose of the rise was to provide financing for phase two of the GHS project which involved extending the system to covering in-patient treatment from 1 June 2020.

However, whilst phase two did proceed as planned (with a few minor restrictions), the introduction of the higher contribution rate coincided with the sudden outbreak of the Covid 19 pandemic.  Thus, whilst the Government did proceed to levy the higher contribution rate in March, it on 27 March 2020 it took the decision to reinstate the former lower rate charge for a temporary period of three months only.  In most instances this means that the higher rate will apply from 1 July 2020 although, for a small number of businesses which implemented the change in respect of March salaries, the effective date should be 1 June 2020.

The change in contribution rates is as shown in the table below.

Category

1 April 2020 to30 June 2020

from 1 July 2020

Employees

1.70%

2.65%

Employers

1.85%

2.90%

Self employed

2.55%

4.00%

Pensioners

1.70%

2.65%

The State

1.65%

4.70%

Other income earners (e.g. rent or interest)

1.70%

2.65%

Government officials

1.70%

2.65%

Persons responsible for the payment of remuneration to Government officials

1.85%

2.90%

 

The increases are required to fund phase two of GHS which is operational and having to deal with an unanticipated cashflow shortage due to the temporary suspension.  Further services such as oncology and dialysis are due to be included in GHS from 1 September 2020.  It is, therefore, unlikely that any further delays in raising contribution levels will be announced.

For more information please speak with your usual contact at Elias Neocleous & Co LLC.