- Posted September 03, 2017
Deemed dividend distribution provisions for the tax year 2017
We would like to remind you of the deemed dividend distribution provisions of the Special Contribution for Defence Law.
These provisions apply in case a Cypriot tax resident company with Cypriot tax resident shareholders has not distributed at least 70% of its adjusted accounting profits for deemed dividend distribution purposes to its direct shareholder(s), within two years from the end of the tax year of which such profits generated. Therefore, for the adjusted profits earned in the tax year 2014, a company may be subject to deemed distribution as at 31 December 2016.
Cypriot Companies within the scope of these provisions should have declared a dividend of at least 70% of its adjusted accounting profits for deemed dividend purposes on or before 31 December 2016 and pay the corresponding special defence tax.
In case a company chooses not to pay a dividend, then the special defence tax on the 70% of its adjusted accounting profits for deemed dividend distribution purposes is payable by 31 January 2017.
The special defence tax rate applicable to profits subject to deemed distribution as well as to profits distributed during 2016 is 17%.
In all case, by 31 January 2017 the relevant forms issued by the Cyprus Tax Department need to be completed and submitted according to the Assessment and Collection of Taxes Law in order to avoid administrative penalties.
Should you need our assist you with the relevant calculations as well as with the preparation and submission of the relevant tax forms please contact us at email@example.com.