Amendments to the obligations of companies and individuals
The House of Representatives passed significant amendments into law in June 2022 to relieve some of the obligations placed on Cyprus businesses and individuals. A summary of these changes is given below.
Limited assurance review introduction
The Assessment and Collection of Taxes Law and the Companies Law were amended by the House of Representatives on June 9, 2022 ("the laws"). The amendments' main goal is to make it easier to audit the financial statements of small and medium-sized businesses ("SMEs").
According to the 2017 Auditors Law, businesses that meet the thresholds listed below may submit their financial statements for a limited assurance review rather than a full audit by a statutory auditor or audit firm. The changes were deemed essential for SMEs and audit firms alike in order to lessen the administrative burden and unnecessary costs.
These laws apply to the following natural or legal entities:
- Companies whose net turnover and total balance sheet do not exceed €200.000 and €500.000, respectively, for at least two consecutive years. The amendment's provisions are applicable to financial statements for businesses with fiscal years ending on December 31, 2022, or any other later date, and they go into effect on January 1, 2023.
- Individuals whose turnover and any other income from sources defined in articles 5(1)(c), 5(1)(f) and 5(1)(g) of the Income Tax law exceed €70.000 but do not exceed €200.000, and whose total balance sheet does not exceed €500.000, for at least two consecutive years.
- Individuals with a turnover of under €70.000 are exempt from the requirement to prepare financial statements. Individuals whose total balance sheet and turnover exceed the aforementioned thresholds must still have a full audit performed on their financial statements.
The aforementioned amendments do not apply to parent companies that are required to prepare consolidated financial statements, companies that are governed and overseen by the Cyprus Securities and Exchange Commission, the Commissioner of Insurance, and the Central Bank of Cyprus, as well as companies that purchase or hold a qualifying participation in such entities.
Reduction of the penalty for submitting annual returns (Form HE32) after the deadline in relation to 2021 and 2022
The Cyprus Companies Law was amended on June 9, 2022, lowering the maximum total penalty for filing annual returns late for the years 2021 and 2022 from 500 euros (€500) to 150 euros (€150) for the time period from June 9,2022 through December 31, 2024.
According to the amendment, businesses that have already paid a fine that exceeds one hundred fifty euros (€150) must receive a cash refund from the Registrar of Companies and Intellectual Property.
An extension to the 2022 annual company levy payment deadline
The payment deadline for the 2022 annual company levy was extended on June 30, 2022, to December 31, 2022.
The usual penalties will be imposed if the annual company levy is paid after December 31, 2022.
It should be noted that, a company may be removed from the Register of the Cyprus Registrar of Companies and Intellectual Property if the annual company levy is not paid, it should be noted.
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