All companies which are Cypriot tax residents, and which expect to have taxable income for the tax year 2021, must estimate this income and pay the temporary tax in two equal instalments before, or on, the following dates:
- 31 July 2021 – Payment of 1st instalment
- 31 December 2021 – Payment of 2nd instalment
It is noted that, the final tax liability for the tax year 2021 should be settled by 1 August 2022. All companies have the right to revise their estimated taxable income at any time before 31 December 2021. If the estimated taxable income is revised upwards, 1.75% interest is payable on the difference between the revised amount payable and the amount initially declared from the due date of payment of the 1st instalment. If the estimated tax paid for 2021, is lower than 75% of the actual tax liability calculated on the basis of the audited financial statements for the year, then a surcharge (penalty) of 10% will apply on the underestimated tax payable. As you may appreciate, each company has responsibility to estimate its results for the tax year 2021 and proceed with a payment of temporary tax, if needed. The company is also liable for any interest or penalties which may arise due to incorrect calculations or estimations. If the company does not expect to have any taxable income for the year 2021, there is no requirement to pay temporary tax. In addition, for companies that wish to proceed with Provisional Tax payments, but fail to submit the Provisional Tax returns by the due dates stated above, there will be an interest rate of 1,75% per annum from the original due date (on a complete month basis) plus a one-off penalty of 5%.
It is important to note that NIL returns need not to be submitted. The Income Tax Office however does accept the submission of NIL tax returns from individuals but not for legal entities. If you would like us to assume responsibility for the preparation of the return and administration of its submission and related payments, please get in touch with us by 7th July 2021 to make the necessary arrangements. In order to ensure timely preparation and submission of the relevant forms please contact our tax department on firstname.lastname@example.org