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In December 2010, the House of Representatives of Cyprus, in an effort to combat tax evasion and tax avoidance, has voted a number of changes in the tax legislation.
One of the major amendments is the imposition of additional administrative penalties for the late submission and payment of income tax for both individuals and companies. The administrative penalties apply to most of the Tax Laws including the Capital Gains Tax Law and the Immovable Property Tax Law and they are in force since 1 July 2011.
The Cyprus tax legislation provides for that companies and individuals preparing audited accounts must pay their tax balance due through self assessment by 1 August following the year of assessment, and submit their tax returns by 31 December following the year of assessment. Failure to comply with the above deadlines shall result in the imposition of interest and penalties.
According to the revised tax legislation the new administrative penalties are:
- Delay in the submission of returns in accordance with the tax deadlines will be subject to €100 penalty.
- Failure or delay in submission of returns to the Inland Revenue Departments in accordance with the tax deadlines and failure to comply within the specified period with the written notice for compliance issued afterwards by the Commissioner of Inland Revenue will be subject to €200 penalty.
- Failure or delay in submission of information requested by the Commissioner of the Inland Revenue Department within the specified period will be subject to €200 penalty (no tax deadline exists in this case).
- Third party failure to comply with the tax deadlines set by the Commissioner of Inland Revenue in respect to the provision of information will be charged with €100 penalty.
- Failure to pay the due or withheld taxes in accordance with the tax deadlines as set by the Inland Revenue Department will result to additional fee equal to the 5% of the tax due.
The above amendments can be seen as an effort of the Cyprus Government to improve its collection of taxes without negatively affecting the position of Cyprus as an international business center.
TAX DIARY
30 April
Submission of Tax Returns by individuals, with a gross income over EURO 19,500 for the previous year. (IR1)
Submission of Employers’ Return (IR7)
Provisional Tax for life insurance companies (first instalment)
30 June
Payment of Special Contribution to the Defence Fund for the first six months of the year
Tax Returns of individuals (self employed persons) with an income of over EURO 19,500 who do not prepare and submit audited accounts
Payment of Tax Balance by individuals (self employed persons) who did not prepare and submit audited accounts for the previous year
1 August
Provisional Tax (submission of provisional tax assessment and payment of first instalment)
Payment of final corporation tax with respect to the previous year
Payment of Tax Balance by individuals who prepared and submitted audited accounts for the previous year
31 August
Provisional Tax for life insurance companies (second instalment)
30 September
Provisional Tax (second instalment)
Immovable Property Tax
31 December
Payment to the Special Contribution to the Defence Fund for the last six months of the year
Submission of Tax Returns for companies for the previous year
Provisional Tax (third and final instalment)
Provisional Tax for life insurance companies (third and final instalment)
End of the following month
Payment of tax deducted from employees’ salary
Social Insurance deducted from employees’ salary
Tax withheld from interest and dividends as defence contribution
Georgia Papa
georgia.papa@eurofast.eu
Tel: +357 22 699 222
www.eurofast.eu
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