As per the Cyprus Income Tax legislation, every Cyprus Company or self-employed, registered with the local Tax Authorities, is required to estimate its taxable profits for the year 2022, and pay their tax provisionally in two equal installments.
This return must be submitted to the local Department of Taxation on or before 31st July 2022, together with the payment of the first installment of the resulting tax for that year (if applicable). The second installment becomes payable on 31st December 2022.
Even though the due date for the payment of the 1st instalment is 31 July 2022, as long as the 1st instalment is paid before 31 August 2022, there should neither be a monetary charge nor any interest for late payment of tax.
Any balance of tax remaining, is payable by 1 August 2023 through a self-assessment.
Where the provisional income declared is less than 75% of the final taxable income, an additional amount of 10% penalty is levied on the difference between the final tax due and the provisional tax declared.
It is also noted that in the event of overpayment, there will be a refund equal to the overpayment of temporary tax together with interest (the public interest rates that apply at that time) on the completed months from the 1st of January of the year following the assessment year for which the provisional tax is concerned.
In the event where it appears that there is no taxable income, it is not required to submit the temporary tax return.
A company may revise its temporary income tax assessment at any time before 31st December 2022. However, a revised tax declaration may not result in a refund of the provisional tax already paid until the final tax computations are filed and agreed with the Department of taxation. It is therefore very important that the provisional tax assessment is prepared on a conservative basis and then revised upwards/ downwards any time before 31 December 2022.
Also, persons who pay their tax after the dates stipulated in the law, are subject to a 5% fine.
Interest on outstanding tax installments is also applicable in case of non-compliance.