Before you go on holidays... 
As we get closer to the year end, we thought to remind you of the upcoming due dates for the payment of taxes and certain developments in Cyprus.
Temporary Tax Second Installment - Due on 31 December 2018

The final installment of the temporary tax for 2018 is due on 31 December 2018. 

If you haven't paid the first tax installment and/or you wish to revise your profits calculation (and therefore the corresponding tax), you can do so until 31 December 2018.

Please remember that by accurately estimating and paying your temporary tax, you save the additional 10% tax which is added in case of non-payment/ low estimation. 

Deemed Dividend Distribution - Due on 31 January 2019

This tax is payable only by companies with Cyprus resident and domiciled shareholders. 

Every Cyprus company has until the 31 December 2018 to issue at least 70% of its 2016 accounting profit as a dividend. Such dividends payable to Cyprus domiciled residents are subject to Special Defence Contribution (SDC) at the rate of 17%.

Otherwise, on 31 December 2018, 70% of the undistributed profits of 2016 will be treated as dividends payable to the shareholders (deemed dividends) and be subject to Special Defence Contribution (SDC) at the rate of 17%.

Increase of Social Insurance Contributions - As from 1 January 2019

As from 1 January 2019, both employer and employee contributions on insurable earnings to the Social Insurance Fund will increase to 8.3% (an increase of 0,5%, from the current rate of 7.8%).  Similarly, the contributions paid by self-employed individuals will increase by 1%, from 14.6% to 15.6%.

Tax Amendments related to Investment Funds 

Recently the Cypriot House of Representatives enacted a series of tax bills relating to the taxation of Cypriot investment funds and the introduction of a flat rate of 8% on the variable remuneration earned by managers of Alternative Investment Funds (AIFs) and Undertakings for Collective Investment in Transferable Securities (UCITS). These amendments have been welcomed by the Investment Fund industry in Cyprus and are intended to enhance Cyprus’s attractiveness to the international funds’ community. 

The Central Bank of Cyprus Circular on Shell Entities 

On 2 November 2018, the Central Bank of Cyprus issued a Circular setting out a revised definition of “Shell Companies / Entities”.  Whether you plan to open a company bank account in Cyprus or you already have one, then you should be aware of this development, determine whether your company falls within the definition of a Shell Entity, consider potential implications for your business (e.g. in case your existing Cyprus bank account may be closed) and what actions are available to you.​

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