Cyprus – Temporary Tax Assessment 2019

The purpose of this email is to inform you about the requirements of the Cyprus Tax Legislation (Assessment and Collection Law as amended in 2002, article 24) regarding the filing of temporary tax returns and relevant temporary tax payments for the year 2019.

Please note that a Temporary Tax Assessment of the estimated net taxable profit for 2019 (if any) should be submitted to the Tax Authorities by 31st of July 2019. The resulting tax is payable in two equal instalments as follows:

  • 1st payment by 31st of July 2019
  • 2nd payment by 31st of December 2019

Your estimation of the taxable profit (if any) must be as close as possible to the actual net taxable profit of the company as any taxes underestimated might be liable to a 10% surcharge.

If you require assistance in calculating your estimated taxable profit then please send us a forecast detailed income statement for the year and we will provide you with a forecast income tax computation together with our advice as to whether you should proceed with Temporary Tax Assessment or not.

It is important to note that companies with no taxable profits do not need to deal with the submission of this return.

Revision of the Temporary Assessment form:

Following the submission of the provisional income tax return you may submit a revised declaration at any time before 31 December 2018. However, a revised provisional tax declaration may not result in a refund of the provisional tax already paid until the final tax computations are filed and agreed with the Cyprus tax authorities.

Interest and Penalties

  • An administrative penalty of 5% is imposed on each instalment if the company fails to pay the declared tax by the due dates stated above.
  • Interest on an overdue instalment of the tax is calculated at an interest rate of 5% per completed month.
  • If the provisional tax declared is less than 75% of the actual tax payable for the year, then a 10% penalty is imposed on the difference of the two.

As the temporary tax relies on the management’s best estimate of each company, it is our recommendation that this should be dealt with only by companies which have their accounting records up to date and are in a position to accurately estimate what the expected taxable profits will be at the end of the year.

If you have any questions or require a free initial consultation, please do not hesitate to contact our Law Firm at [email protected], +357 22 261 777 or +357 25 261 888 or please visit our offices in either Nicosia or Limassol.