The second temporary tax return for 2023 must be submitted and the corresponding tax to be paid by the 31st of December 2023.
1. Introduction to temporary tax assessments
1.1. Applicable to:
- Cyprus Companies with taxable income
- Individuals with taxable income other than salaries, pensions, dividends and interest
The above tax payers must submit their 1st and 2nd temporary tax (provisional tax) returns before the 31st of July and 31st of December of each year, respectively. The temporary tax should be calculated based on the current year’s estimated taxable income and pay the corresponding temporary tax. The temporary tax payments must be made in two equal installments.
In case the first provisional tax payment was made based on an incorrectly estimated yearly profit then the taxable income can be revised (upwards/downwards) any time prior to 31st of December of the current tax year.
However, in case the revised provisional tax declaration results in a refund, then the refund will only be returned after the examination of the submitted tax return by the Cyprus Tax department.
It should be noted that if there is no taxable income, then there is no requirement to submit a temporary tax return.
2. Tax Payments schedule
- 1st instalment: 31st of July 2023
- 2nd instalment: 31st of December 2023
- Any final resulting tax liability for the year 2023 should be settled by 1st of August 2024.
3. Revision of first provisional tax
In case a taxpayer revises its first provisional tax calculation, then any outstanding provisional tax will need to be settled until 31 December 2023.
For an upward revision of the first provisional taxable income declared, interest at 2,25% per annum would be imposed on the additional amount of the first provisional tax instalment. For a downward revision, forms T.D.5 (Individuals) and T.D.6 (Companies) should be sent to the local District Tax Collection Offices via e-mail.
Timely Tax Payments for 2nd installment (i.e. within one month from the payment deadline – Up to 31 January 2024)
For timely tax payments (i.e. not passed their statutory deadlines), the tax can be paid either electronically via https://www.JCCSmart.com by paying the amounts under code 0200 for the respective tax year or via online banking, using the unique Payment Reference Number (PRN) made available by the Tax Portal of the Tax Department (TD). Such PRN should be automatically created following the payment of the first provisional tax instalment.
Late Tax Payments (i.e. after one month from the payment deadline – from 1 February 2024)
For tax payments which are pass due their respective deadline, the tax can only be made via online banking and will also be subject to interest at the current rate of 2,25% per annum plus a 5% penalty on the tax due. An additional penalty of 5% may be imposed by the TD, if the tax remains unpaid two months after the above due date. For overdue payment, the tax must be recorded on the Tax Portal which will calculate the final tax and applicable penalties. Then the final tax can be paid through the tax payer’s bank portal by entering the reference number shown on the Tax Portal for each particular payment.
5. 10% additional tax for understatement of provisional tax payments
It is highlighted that where the provisional taxable income declared and paid is less than 75% of the final taxable income for the year, then an additional tax is imposed, equal to 10% of the difference between the final tax due and the provisional tax paid.