2024 Provisional Tax: Deadlines and Compliance Reminder
We would like to bring to your attention the requirements and upcoming deadlines for provisional tax in Cyprus. This is a key tax obligation for Cyprus tax resident companies and is essential to avoid interest and penalties.
What is Provisional Tax?
Provisional tax is an advance tax-payment towards your company’s income tax for the year, calculated based on expected taxable profit for the year. Provisional tax is due in two instalments, and it’s a way to help spread out the year’s tax liability rather than paying it all at once. For the tax year 2024, the two instalment deadlines are:
- First Instalment: 31 July 2024 (already past)
- Second Instalment: 31 December 2024
Companies are required to estimate their annual taxable profit and make payments accordingly. If no provisional tax is declared (or paid) by the deadlines, the Tax Department will assume a NIL income and provisional tax.
What If the Provisional Tax Falls Short?
To avoid additional penalties, companies should ensure that their provisional tax payments cover at least 75%of the actual (final) tax charge. If the provisional tax paid falls below this threshold, an additional 10% tax will be imposed on the difference between the declared provisional tax and the actual tax amount due when the final tax return is submitted.
If during the year it becomes clear that the initial estimate of taxable profit needs adjustment—such as when moving from a loss to a profit position—a revised declaration can be submitted by 31 December 2024 to reflect these changes.
Final Tax Payment and Consequences of Late Payments
Any remaining tax due after provisional tax-payments must be settled by the 1st of August 2025. Missing provisional tax deadlines can result in:
- 5% Interest on overdue tax amounts, calculated monthly
- 5% Penalty on any instalment amounts that remain unpaid by the specified deadlines (i.e., the end of each instalment period)
Timely compliance with these deadlines can help your company manage tax liabilities efficiently and avoid unnecessary penalties.
How We Can Help
We can assist in estimating your provisional tax payments, draft provisional tax calculations, set up provisional tax liabilities on the Tax Portal website, and manage tax settlements.
Should you have any questions or require further clarification, we are here to assist. Please contact us at enquiries@consulco.com.