Cyprus offshore companies- Cypriot Offshore Company Incorporation Offshore Financial Services

Cypriot International Business Companies

TAXATION OF ITCs

1. Corporate Tax Rate

2. Other Taxes: Capital Taxes, VAT

The corporate tax rate is 10% of net profit. Non-resident Companies are subject to 0% tax provided that the directors are located outside Cyprus, all business decisions are taken outside Cyprus and that it has no sources of income in Cyprus.

Expenses incurred wholly and exclusively in the production of the income are fully deductible for Cyprus corporate income tax purposes.

Other taxes:

Capital Tax

No capital taxes are payable on capital contributions into Cyprus resident companies. Together with the absence of thin capitalization provisions, companies remain very free to fund their Cyprus operations as they wish.

VAT

VAT is chargeable on the provision of goods and services in Cyprus, as well as on the importation of goods into Cyprus. Taxable persons charge VAT on their supplies and are charged with VAT on goods or services purchased. If output tax in a VAT period exceeds total input tax, a payment has to be made to the state. If input tax exceeds output tax a refund is due by the state.

As an exception to the general rule, input VAT cannot be recovered in a number of cases, including the following;

When businesses only make exempt supplies;
The purchase, import or hire of saloon cars;
Certain entertainment and hospitality expenses

Cyprus VAT legislation provides for three rates; the zero (0%) rate, the reduced rate (5%) and the standard rate (15%). Zero rated goods and services include amongst others exports, commissions received from abroad for exportation of goods and international air and sea transport.

Registration is compulsory for businesses a) with turnover in excess of 9.000 Cyprus Pounds during the 12 preceding months, or b) with an expected turnover in excess of 9.000 Cyprus Pounds in the 30 days following. Businesses with less than 9.000 CYP turnover have the option to register if they wish to do so.

VAT returns must be prepared and submitted quarterly and the payment of the VAT must be made within 40 days from the end of each quarter. Other administrative obligations for VAT payers include

Preparation and submission of the Intrastat document for statistical purposes (Intracommunity Statistics), which has to be prepared for all intra EU sales and purchases and is a monthly document to be prepared within then days from the end of the month;
Preparation and submission of VIES document (VAT Information Exchange System), which document is used by EU-member states for the exchange of information and the avoidance of tax evasion.

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