Obligation for provisional tax payment
As per the Assessment and Collection of Taxes Law, every company or individual (whose income includes other than remuneration) must file before 31 July 2023 a declaration of provisional tax assessment form to the tax authorities. This should indicate an estimate of the taxable profit for income tax purposes and the resulting tax liability for current tax year.
Payment deadlines
Provisional tax is payable in two equal instalments, 31st July 2023, and 31st December 2023 respectively.
Any final resulting tax for the year 2023 should be settled by 01 August 2024.
Interest/Penalties
Payment of the taxes after the due dates are subject to a 5% penalty which is actually imposed if payments are not made within a month of the due dates (31st August 2023 and 31st January 2024).
The provisional tax assessment can be revised prior to payment of the 2nd instalment (31st December 2023) via submission of a revised form to the authorities. In the case of an upward estimation of tax payable, a 2.25% annual interest is payable (pro rata) on the difference between the revised amount payable and the amount initially declared for the 1st instalment.
Payments of less than 75% of the annual tax liability as provisional tax (cumulative in both installments) will be subject to a 10% surcharge on the resulting tax liability.
In the case that no taxable income for 2023 is expected, there is no requirement to submit a declaration of provisional tax assessment form and pay any temporary tax to the Tax authorities.
Provisional tax for newly incorporated Companies
In cases where the Company was established within the period from July 31 to December 31 in a specific calendar year, the said Company is not obliged to pay the 1st installment of the provisional tax.
Therefore, the total estimated provisional tax for that year should be paid by December 31 without interest and penalties. Companies which are affected should apply to the relevant District Tax Office and submit a written request for the write off any interest and penalties imposed on their 1st installment of provisional taxation.
Kreston Ioannou & Theodoulou Ltd (KRESTON ITH) assistance
Kreston ITH can assist you in estimating the provisional tax assessment of 2023 as well as provide any further information on provisional tax payments.
If we do not hear from you by 17/07/2023 for assistance in calculating temporary tax, we will assume that your company will not have any taxable profit for the year 2023 and thus, no provisional tax will be paid.
Contact persons
Gabriel Ioannou Sofia Christou
g.ioannou@ith.com.cy s.christou@ith.com.cy
+357 22050530 +357 22050518
