PROFEL LTD is a firm specializing in the establishment, registration, and administration of companies in international jurisdictions and in the provision of professional services for the achievement of a successful business profile with optimal profitability.

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Taxation PDF Print E-mail

CORPORATION TAX

Basis

Corporation tax is imposed on every legal entity which is a tax resident of Cyprus on its worldwide income. A company is considered to be a tax resident of Cyprus if it is managed and controlled in Cyprus.

Non- tax residents of Cyprus are only taxed on their income that is accrued or derived from a business activity which is carried out from a permanent establishment in Cyprus.

Tax rate: 10%

Some types of income exempt from taxation:


Type of income

Dividends

Profits from the sale of securities

Interest income (under certain conditions)


Profits of a permanent establishment abroad

Exemption limit

The whole amount

The whole amount

50%


The whole amount (conditions apply)


SPECIAL CONTRIBUTION FOR DEFENCE FUND

Special contribution for defence fund is only imposed on income earned in Cyprus by tax-residents of Cyprus. Non-tax residents are exempt of the special contribution for defence fund.

Tax Rates:

Type of Income Persons Companies

Dividend income from CY- resident companies

Dividend income from non-Cyprus resident companies*

Interest income (under certain conditions)

Interest income earned from savings certificates and development stock issued by the government

Interest income earned from the ordinary activities in the course of business or closely related to the ordinary activities of the business


Rental income

%
15

15

10


3


NIL


3

%
NIL

NIL

10


10


NIL


3

l *Note: - Dividend income from abroad is exempt from the special contribution for defence fund provided that the company receiving the dividend owns at least 1% of the company paying the dividend. This exemption does not apply if more than 50% of the paying company’s activities result directly or indirectly in investment income and the foreign tax burden on the income of the non-resident company paying the dividend is substantially lower than the tax burden of the company which is tax-resident in Cyprus.

Credit against foreign tax withheld

Any foreign tax paid on income that is subject to the defence tax can be credited against the defence tax liability irrespective of the existence or not of double taxation treaty.

Deemed dividend distribution

Tax-resident companies not distributing a dividend within 2 years from the end of the tax year are liable to 15% defence tax on 70% of their accounting profits.

Profits attributable to non-tax residents are not subject to the deemed distribution.

Capital Gains TAX

Capital gains tax is imposed at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own immovable property in Cyprus and not listed in any recognized stock exchange.

Estate Duty

No estate duty.

Cyprus Tax Treaties