The Cyprus Income Tax Office has made significant changes to the 2014 company tax returns (IR.4s) which could cause serious tax issues if not completed with due care and preliminary work by the company’s accountant!
The changes in the 2014 tax returns are the request of additional Company information:
For the VAT of the Company
For the related parties of the Company
These two developments imply that the merge of the Income Tax Office and the VAT Office enables them to scrutinize automatically the information reported to both forms (IR4 and VAT) and to scrutinize any discrepancies subject to their discretion.
For instance, if Company X Ltd has reported turnover of Euro 100,000 in its tax returns and only Euro 60,000 in its VAT returns then the Cyprus Income Tax office will pick up the difference automatically and subject to its discretion, perform an investigation accordingly.
Similarly, the related companies and persons involved with company X Ltd could be subject to scrutiny subject to the discretion of the income tax office.
There are various remedies to such issues which can be
resolved proactively with the assistance of our tax consultants.