We at SPL Audit (Cyprus) LTD would like to remind you that the last day to submit any necessary changes to the provisional tax calculation for 2022 is December 31st, 2022, as well as the date by which the second instalment of provisional tax for 2022 must be paid.
Who has the obligation to pay provisional tax
The following individuals should think about submitting a temporary tax calculation and making a provisional tax payment:
- People/Individuals who have other earnings besides the basic taxable income such as salary, pension, interest or dividends, and
- Firms with taxable gross income
Payment of the 2nd provisional tax instalment (presuming there is no modification)
An individual or a company who has an obligation for paying tax, can settle the second instalment of provisional tax (according to the preliminary calculation) within four weeks of the payment due date (by the end of January 2023) without incurring any extra charges or fines.
It is possible to settle the second instalment of provisional tax on time through the JCCsmart platform or the online banking system, with the help of the Unique Payment Reference Number (PRN) that is generated automatically by the TD Tax Portal after the payment of the first provisional tax instalment.
If provisional tax payments are submitted after the due date, they must be paid online and will incur an interest of 1.75% per annum in addition to a 5% penalty on the amount owed. If the tax is not paid two months after the due date, the Tax Department may impose an extra 5% penalty.
Possibility of adjusting the provisional taxation calculation and settling the outstanding balance of it
If the original taxable income is determined to be lower than what was initially reported, any remaining provisional taxes can be paid without penalty or interest by January 31st 2023.
In the event that the original taxable income declared is increased, the additional amount of the first provisional tax instalment must be paid by December 31st 2022, with an annual interest rate of 1.75% for any late payments, and a penalty is applied for each entire month that the payment was delayed. The amount of the second provisional tax instalment can be paid until the end of January 2023 without the imposition of any extra interest or penalties.
If there is a necessity for a decrease in taxation, individuals and businesses should transmit T.D.5 and T.D.6 documents, respectively, to the District Tax Collection Offices through electronic mail.
Penalties for Late Submission
Taxpayers should remember that when the estimated taxable income declared is lower than 75% of the overall taxable income for the year, an extra surcharge will be charged, equal to 10% of the disparity between the overall tax owed and the provisional tax paid.
According to Circular 54, if a worker or pensioner has a salary that is higher than any other type of income they have and they have already paid tax on at least 75% of their entire income through their employer’s withholding system (PAYE), then the 10% extra surcharge will not be applied.