Taxes - Cyprus
Companies are taxed under the income tax act, as amended, and taxes are collected according to the assessment and collection of tax act, applicable to both natural persons and legal entities (corporate tax).
A company is deemed to have its tax domicile in Cyprus when its management and control are exercised in the Republic of Cyprus. Taxable income includes both domestic income and the income earned abroad. Companies that do not have their tax domicile in Cyprus are taxed only on their domestic income.
All companies are subject to corporation tax at a uniform rate of 10%.
Profits and share dividends paid by a shipping company as the term is defined in the Commercial Shipping Act (Fees and Tax Provisions) - 44(I)/2010, are exempt from income tax.
Cyprus has signed 37 conventions regarding the avoidance of double taxation covering 45 countries.
Value Added Tax (VAT) is levied on all taxable goods or services delivered or provided in Cyprus, with the exception of any transactions exempt from tax according to VAT legislation.
Any person involved in taxable supplies of goods, services, intra-Community acquisitions or distance sales must become registered under the VAT Register by submitting a relevant application to the competent VAT District Office before the passing of the relevant deadline from the creation of the obligation.
Every company and natural person subject to tax liabilities under relevant legislation is also required to register with the Inland Revenue as soon as possible in order to receive a Tax Identification Number (T.I.N.).
The aforementioned procedures can be performed either through the Income Tax District Offices, or through the One Stop Shops of the Ministry of Commerce, Industry and Tourism, irrespective of the type of activity the taxpayer is involved in.
Registration under the Value Added Tax registry may also be carried out through the One Stop Shop at the Ministry of Commerce, Industry and Tourism of the Republic of Cyprus.
Submission of tax return form
Every company must submit a Company Tax Return based on selected accounts, no later than 31/12 in the year following the fiscal year to which the income specified can be attributed.
Natural persons who fall under the above provisions, must submit an Employee or Self-Employment Tax Return, where appropriate, while every company or natural person employing at least one person must submit an Employer's Declaration to the Inland Revenue Department.
Legal entities are required to submit a provisional tax return by August 1 of the current financial year.
Every month, the company/employer deducts the tax according to the annual income of each employee from the employees' salary and submits the employer's declaration by 30 April of the following year. A person registered for VAT must submit a VAT return for the tax period specified. Usually the tax period is quarterly.
All the tax forms and other information are available from local offices of the Inland Revenue Department and the Department’s website. On many occasions, the tax return may also be submitted electronically.
Businessmen may find all the information regarding their obligations on Value Added Tax as well as the relevant procedures at the VAT Department of the Ministry of Finance.
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