Compulsory requirement for the preparation of Audited Financial Statements.
As per the Cyprus Companies Law (CAP. 113), Cyprus incorporated Companies are required to have their financial statements audited and signed by a Cyprus registered auditor.
Under the Cyprus Companies Law, financial statements are required to be prepared in accordance with the International Financial Reporting Standards (IFRS) and audited in accordance with International Standards on Auditing (ISAs).
Audited Financial statements must be prepared for each financial year. In case of newly registered companies the first financial statements can be prepared for a period up to 18 months from the date of incorporation.
Annual audited financial statements must be submitted with the Cypriot Registrar of Companies showing the true and fair view of company’s affairs and transactions.
In addition, audited financial statements are used as the basis for the preparation of Corporate Tax Returns (Form T.D4) and the submission of those by 31st March of the subsequent year of the year following the relevant tax year. For example, for the filling of the tax return for the year 2017, the last date for submission is 31st March 2019.
Administrative penalties amounting to EUR100 are imposed for late submission of tax declarations or the submission of any other supporting documentation requested by the Commissioner of Taxation. Legal actions may also be initiated against the Company and its directors for continued non-submissions.
Preparation of audited accounts by Small / Dormant Companies
The obligation for the preparation of audited financial statements applies also for Companies that had no operations during a particular financial year or are classified as small entities. The exemption for small/dormant companies that was previously existed in Companies Law has been abolished since September 2016.
Preparation of audited accounts by self-employed persons
Self-employed taxpayers have an obligation to prepare audited accounts if their total income (business income and other income like rents, dividends, interest etc) exceeds EUR70.000.
If a self-employed person has business income which is less than EUR70.000 but also other incomes such as rents, dividends or interest which in total exceed EUR70.000 (business income and other incomes), then the self- employed person has an obligation to prepare audited accounts and include such incomes. This applies only to self-employed persons who exercise a business activity. It does not apply to pensioners or employees.
By Christina Ioannou,
Head of Audit, PHS & Partners
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