July 6th, 2016 – Temporary tax – Preliminary self-assessment for the year 2016

Under the provisions of the Income Tax Law, every Company must submit to the Tax Authorities by 31st July a preliminary self-assessment, declaring the Company’s estimated Taxable income of the current year as well as the respective Tax payable. The general income tax rate for all companies for 2016 is 12.5%.

Note that the non-submission of such return is considered as submission of zero declaration, that is to say zero taxable income and zero tax.

The estimated Tax payable must be paid in two equal installments on or before 31st July and 31st December.

The original declaration can be revised at a later stage before 31st of December of the current year. However, the revised Taxable income will be apportioned equally over the two installments and the difference on the installments already paid will attract interest at 4.0%. Late filing of the return will entail penalty at 5% plus interest.

The declared Taxable income must not be less than 75% of the final Taxable income as determined by the audited Financial Statements otherwise an additional tax of 10% on the remaining tax payable will apply. We remind you that the tax return for 2016 needs to be submitted by 31st March 2018 although interest on the amount due is calculated from 1st August 2017.

June 30th, 2016 – Double Taxation Avoidance Agreement between Cyprus and India

On June 29th, 2016, the negotiation on the Double Taxation Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income between Cyprus and India has been successfully completed, in New Delhi. The completion of the negotiation and the agreement reached on all pending issues will pave the way for the removal of Cyprus from the list of notified jurisdictional areas place in November 2013.

It has been agreed that, following the entering into force of the amending Agreement the Indian Authorities will proceed with retrospectively rescinding  the classification of Cyprus in the ‘Notified Jurisdictional Area’ as from 1st of November 2013.

The text has been agreed between the two negotiating teams of the Contracting States and will contribute to further develop the trade and economic links between Cyprus and the Government of the Republic of India, as well as with other countries.

The agreement reached provides for source based taxation for gains from the alienation of shares; investments undertaken prior to April 1st 2017 are grandfathered with the view that taxation of disposal of such shares at any future date remains with the contracting state of residence of the seller.

Upgrading and expanding the network of Double Tax Conventions, is of high economic and political importance and aims to further strengthen and attract foreign investment in Cyprus as its standing an international business center is elevated.