TAX HIGHLIGHTS
Companies Resident in Cyprus

Are taxed on their worldwide income

Resident companies

Are those whose their management and control is exercised in Cyprus

Corporate Tax rate

12,5%

Tax year

31st December

Filling requirements

By 31st December following the accounting year end

Payment of tax

-Must pay provisional tax in 2 equal installments.

Penalties

-Euro 100 for late filling
-10% additional tax if the provisional tax paid is lower than 75% of the final tax
-5% interest for late payments due after 1 January 2011 (5,35% for the year 2010, 8% for the years 2007-2009 and 9% before 31 December 2006)
-Penalties are also charged depending on the circumstances

Fixed annual levy of Euro350 is imposed on each company, capped at Euro20.000 for companies of a group

-The deadline for paying the annual duty for 2012 is by 31 December 2012
-For subsequent years the annual duty will be due by 30th of June
-According to the recent amendments of the Companies Law, the fixed annual levy is not applicable to dormant companies and those that have been incorporated during the year that the levy is due.

Business profits, interests and discounts, rents, royalties, remunerations and other profits from property after the deduction of expenses incurred for the production of income.

Are subject to corporation tax at a rate of 10%.

Special contribution for defence

Imposed on income earned by Cyprus residents

Taxable losses

Can be carried forward and set off against taxable income of subsequent years without any time limit.

Arm’s length principle

Requires that all transactions between related parties should be carried out at market value and on normal commercial terms.