All companies that are Cyprus tax residents are taxed in accordance with the Cyprus Income Tax Laws and Regulations.
According to these laws and regulations, all companies that will have taxable income for tax year 2016 should submit to the Tax Authorities by 31st July 2016, a temporary tax assessment form (I.R 6), based on their estimated taxable profits for the current year and pay the temporary tax in two equal instalments before or on the following dates:
- 31 July of 2016 -1st instalment and submission of form
- 31 December 2016 -2nd instalment
All companies have the right to revise their estimated taxable income at any time before 31 December 2016. If the estimated taxable income is revised upwards, 4% interest is payable on the difference between the revised amount payable and the amount initially declared from the due date of payment of each instalment.
If the estimated tax paid for 2015, through temporary tax assessment, is below 75% of the actual tax liability calculated on the basis of the audited financial statements for the year, then there will be a surcharge (penalty) of 10% on the underestimated tax payable.
As you can appreciate, it is each company’s responsibility to assess its results for tax year 2016 and proceed with a payment of temporary tax, if needed. The Company is also liable for any interest or penalties arising because of wrong calculations/estimations. We can assist in this exercise.
The way to proceed
a. If you would like our assistance in calculating the taxable profit for your company for 2016, please forward to us the projected 12 month results for tax year 2016 (Projected Income Statement 1/1/2016 – 31/12/2016) of your company by 11 July 2016, so we can carry out an estimate of your taxable income. This estimate will be communicated back to you with our recommendation, and you can decide based on this, whether to file the temporary tax assessment form (I.R.6) and pay any temporary tax in two instalments.
b. Alternatively, you can estimate your taxable profit for your company, using the template below and inform us by 18 July 2016 at the latest, whether you would like us to file the temporary tax assessment form (I.R. 6) on your behalf and make the relevant payments.
Please note that income which is generally exempt from the scope of income tax in Cyprus, such as dividend income and gains on disposal of ‘titles’ (shares) should not be included in the below computation. Also expenses which relate to these tax exempt activities (e.g. agency fees for acquisition of shares or expenses which were not incurred wholly and exclusively for the production of taxable income e.g. expense paid on behalf of other parties) should also not be included in the below calculation.
Please indicate how you want us to proceed. If we do not hear from you by 11 July 2016 (for assistance in calculating temporary tax), or by 18 July 2016 (for assistance in filing IR6) we will assume that your Company will not have any taxable profit for 2016 and thus no provisional tax form will be submitted.
Should you require any further information/clarifications please do not hesitate to contact Louiza Loizou on 24823381.
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We will analyze your case and advice you on:
- What company structure suits you best,
- What is the best Tax solution(s) for your business,
- What Banking and cash flows arrangements available.
We will take you through a step by step process from A to Z in creating the perfect business in Cyprus.
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If you want to work with professionals who provide exceptional quality standards of services in Cyprus, the simplest way is to fill in the contact form below.
We will take you through a step by step process from A to Z in creating the perfect business structure in Cyprus.
Can’t wait any longer? Become even more successful by working with accountants you can count on and be among the thousands business that already did.