We wish to inform you of news regarding the filing of temporary tax return and relevant temporary tax payments for the year 2017. This tax requirement applies only if the company estimates that there will be taxable profits during 2017.
The Temporary Tax Assessment of the estimated net taxable profit for 2017 (if any) for each company should be submitted to the Tax Authorities by the 31st of July 2017. The resulting tax is payable in 2 equal installments as follows:
1st payment by the 31st of July 2017
2nd payment by the 31st of December 2017
It is not required to file a temporary tax assessment in the cases as listed below:
Where the company is not anticipating to generate taxable profits
Where the company has been generating losses in the past years and these losses will be used against any profits generated in 2017 and following years
Where the company is not Cyprus tax resident
For the purpose of estimating the taxable profit please note that the following sources of income are exempt from Corporation Tax and therefore should not be taken into consideration:
Profit from disposal of shares/securities
Interest income received from fixed deposit accounts
80% of any income/profit from disposal generated from intellectual property rights (i.e. copyrights, patents, trademarks) as per the provisions of the Cyprus IP regime
Exchange gains (realized or unrealized) provided that such profits do not derive from trading in currencies
Not complying with this tax requirement there will be penalties and interest imposed on the tax obligation derived from the taxable profits of 2017 as follows:
If the provisional tax declared is less than 75% of the actual tax payable for the year then an automatic 10% penalty is imposed on the difference derived between the total tax liability and the tax paid during the year
There will be an interest calculated at the rate of 3.5% on the overdue installment (in case of late payment)
A company is allowed to submit a revised declaration of temporary tax assessment at any time before 31st of December 2017. However, a revised provisional tax declaration cannot result to any refund of the provisional tax already paid. A refund may be achieved after the filing of the corporate tax return for the year and after further communication with the Cyprus Tax Authorities. In cases where after the completion of the audit of the financial statements for the year ended 31 December 2017, more taxable profit is generated from the one that has already been declared, then the company can proceed with the settlement of the additional tax obligation by or before the 31st of August 2018.
For more information and assistance in calculating, submitting and settling the temporary tax obligation please feel free to contact our administrators.