Kindly be informed that a Cyprus Company/Partnership/Sole trader which estimates to be profitable in a given year is required to proceed with a prepayment of the Corporation/Income Tax liability in two equal instalments in a given year. Please find below the due dates for your ease of reference for the current year:
1. 1st instalment by 31st of July 2023 (*)
2. 2nd instalment by 31st of December 2023 (**)
You should note that:
· (*) The payment can be made by 31 August 2023 without any interest and penalties.
· (**) The payment can be made by 31 January 2024 without any interest and penalties
· Non-payment of the 1st instalment on the due date attracts a minor interest at the rate of 2,25% per annum. Please note that it is possible to pay both instalments in December, by paying a minor additional penalty for the delayed payment of the 1st instalment.
· There is the possibility to revise (upwards or downwards) the provisional tax during the second instalment in December. If the estimated taxable income is revised upwards, an interest of 2,25% per annum will apply on the difference between the revised amount and the amount initially declared and will apply from the due date of the 1st instalment.
· If the estimated taxable income declared in 2023 is less than 75% of the final taxable income as determined by the Income Tax return submitted for the year 2023, then any balance of the remaining tax liability is subject to an additional 10% charge.
Our suggestion is to proceed with a temporary tax payment of around 80% of the estimated taxable income, in order to avoid any overpayment of taxes. Please note that in case of overpayment of taxes, this amount will only be refunded upon the finalization of a tax examination of the relevant year.
Please don’t hesitate to contact us for any further clarifications you might need.