Provisional tax for 2021 tax year in Cyprus

Provisional tax for 2021 tax year in Cyprus

We inform you that December 31, 2021 is the deadline for filing the revised (if necessary) preliminary tax estimate for 2021 and the deadline for payment of the second preliminary tax payment for 2021.

Obligation to pay input tax

The following persons should reconsider whether they should file a provisional / provisional tax estimate and pay provisional tax:

• Individuals with taxable income other than salaries, pensions, dividends and interest.
• Companies with taxable income.

Payment of the second preliminary tax payment (assuming no change)

The taxpayer can pay the second preliminary tax payment (according to the initial preliminary tax calculation) within one month from the date of the payment deadline (i.e. until January 31, 2022) without interest or penalties.
The timely payment of the second tax advance payment can be made through online banking using the unique payment reference number (PRN) provided by the Tax Department’s (TD) Tax Portal. This PRN should be generated automatically after the first advance tax payment has been paid.

Late payment of input tax can only be made through online banking and will also be subject to an interest rate at the current rate of 1.75% per annum plus a penalty of 5% of the tax payable. An additional 5% penalty may be imposed by TD if tax remains unpaid two months after the above deadline.

The Hadjivangeli team will help you with taxation and financial business planning.

When is it possible to revise the preliminary tax calculation and payment of the remaining due input tax?

• In the event that a taxpayer revises his preliminary tax calculation, all outstanding preliminary taxes will need to be paid by December 31, 2021.
• If the declared provisional taxable profit is revised upward, the additional amount of the first provisional tax payment will be subject to interest of 1.75% per annum.
• In the event of a downward revision of the form T.D.5 (Individuals) and T.D.6 must be sent to the local district tax authorities by e-mail.

Introduction of 10% additional tax if the final tax amount is underestimated

Taxpayers are reminded that if the reported provisional taxable income is less than 75% of the final taxable income for the year, an additional tax equal to 10% of the difference between the final tax payable and the prepaid tax will be charged.
It is important to note that, according to Circular 54, for employees and retirees whose remuneration is higher than their other income and they have paid a tax of at least 75% of their total income through employer withholding (under the PAYE system) an additional tax of 10 % is not charged.

The above is for informative purposes only.  Further professional advice should be sought for each particular case. Our firm does not accept any responsibility for any loss or damage occurring by acting on the basis of this information.