Cyprus has a system of self-assessment for corporation tax. All Cyprus tax resident companies have to pay provisional tax based on the estimated current year’s profits (2020) in two instalments:
1st instalment: 31 July 2020;
2nd instalment: 31 December 2020.
Therefore, we would like to remind our clients and associates about the upcoming deadline for submission of the 1st declaration concerning provisional tax for the year 2020.
Computation of Temporary Tax
The provisional tax is calculated on the profits that are expected to arise in the year 2020.
According to art. 24 of the Assessment and Collection of Taxes Law No.4 of 1978, as amended, the official deadline for submission of the Provisional Tax Returns (Form I.R.6) for the year 2020 and payment of the first instalment is 31st July 2020.
This concerns companies having taxable income only. Entities that expect no profit for 2020 do not have to submit provisional tax.
Penalties for Late Submission
As per the article 50A(e) of the Assessment and Collection of Taxes Law No.4 1978, as amended, entities that pay their tax after the dates stipulated in the law, are subject to a 5% fine plus interest of 3.50% on the payable amount.
Low Estimation of Chargeable Income
10% surcharge applies on the difference between the tax as finally determined and the temporary tax assessed. The surcharge applies only where the estimation is less than 75% of the chargeable income as finally determined.
Need help with provisional tax return?
Do not hesitate to contact us if you need more explanation about the provisional tax or assistance in calculating/submitting the return.