Provisional Tax Liability by Newly Incorporated Companies

According to the recent interaction between the Commissioner of Taxation and the Tax Compliance Committee of ICPAC (“The Institute of Certified Public Accountants of Cyprus”), no penalties or interest should be imposed on the entity which was incorporated within the period from 31.07.2022 (first installment of the provisional tax) to 31.12.2022 ( second installment) in a particular calendar year, because by default the company would not be able to procced with the payment of first installment of the provisional tax.

Therefore, the overall estimated provisional tax liability for the specific year shall be due by 31st of December without the imposition of any penalties.

Companies which fall under these exceptions should apply to the relevant District Tax Office and file a written request for the waiver of any penalties, if any occurred, for their first instalment of provisional tax.

As a reminder, Cyprus companies are required to apply a provisional tax assessment / calculation of their 2022 chargeable income under the Cyprus Income Tax Law in two equal installments: 31.07.2022 and 31.12.2022.