TAX ALERT - SECOND PROVISIONAL TAX RETURN 2017

We would like to kindly remind you that the second and final installment of your computed provisional tax is due for settlement with the Cyprus Inland Revenue by 31st December 2017.

 

Background

 

As you may already be aware, taxpayers must submit a Temporary/Provisional Tax Return (Form I.R.6 for legal persons) each year based on their estimated current year’s taxable income and pay the equivalent temporary tax in two equal installments, on 31st of July (already submitted, if applicable) and 31st of December.  

 

In the event that, based on your computation, there is no taxable income, you are not required to submit the Temporary Tax Return. It is important to note that NIL returns need not to be submitted.

 

Key matters to consider

 

Estimated taxable income can be revised (upwards/downwards) by submitting a revised Temporary Tax Return any time prior to 31st of December of the tax year.

 

Any late payments of temporary tax are subject to:

  • a 5% fine (flat rate), calculated on the principal amount of tax, and
  • interest at 4% p.a. on every completed month of delay.

 

If the taxable income declared for temporary tax purposes is less than three quarters (3/4) of the taxable income, as finally determined, the taxpayer must pay, in addition to the normal tax, an amount equal to one-tenth (10%) of the difference between the final and the temporary tax.

 

Any difference between the provisional tax amount, as computed in your Temporary Tax Return, and the actual tax liability, as finally determined, must be settled by 30th of August of the following year of assessment (for tax year 2017 the final payment must be made by 30th of August 2018).

 

In completing your Temporary Tax Return for 2017, please take into consideration that any taxable losses brought forward from previous years can no longer be carried forward indefinitely. As per the Income Tax Law, tax losses cannot be carried forward after the lapse of five years from the end of the tax year during which the loss occurred (i.e. for tax year 2017, only the tax losses from 2012 and onwards can be utilised).

 

How we can help

 

We would be pleased to assist you in calculating your temporary tax regarding the second installment, as well as facilitate the timely submission of a revised Temporary Tax Return, and/or regarding settlement of the second installment.

 

We remain at your disposal for any further information / assistance in respect of the above.