TAXES: IDENTIFICATION NUMBER, RETURNS AND DECLARATIONS
Any and all companies registered within the Republic of Cyprus, retain the statutory duty to undergo registration with the tax authorities of the Republic within a term limit of 60 (sixty) days following their official incorporation. Upon registration, the newly incorporated company will apply and subsequently be allocated a Tax Identification Code, each of which unique to the specific Company. The unique code is a crucial element which allows for the governmental organs to conduct a thorough and transparent assessment of the Company’s trading activity, transactions and commercial operations. This likewise benefits the Company as it enables it to consistently display the satisfaction of its tax obligations before the relevant governmental departments of the Republic of Cyprus and enables it to contract with and conduct commercial activities within and outside the scope of both its local and European market. The Tax Identification Code will be used in completion and subsequent submission of the IR 4 form for tax returns, which shall include inter-alia company details, balance sheet, profit & loss accounts and the tax computations among others. The submission of the IR 4 has a pre-cursor requirement amounting to the preparation of consolidated and audited financial statements in accordance with the standards on auditing, as such are imposed and amended from time to time, by the International Auditing and Assurance Standard Boards (IAASB). The IR 4 form is required to be signed by both the auditors of the Company and the Board of Directors of the Company, prior to its recurrent submission on an annual basis in order to avoid any legal, economic or administrative fines or penalties.
THE ANNUAL GENERAL MEETING (AGM) OF THE COMPANY
Any and all companies which are duly registered and existing pursuant to the laws of the Republic of Cyprus retain statutory obligations in regard to their respective internal management, assessment and overview of the Company’s dealings. A Company as such, is required as a person capable of retaining legal liability, to be aware of its dealings, its administrative and commercial history as well as its officers and their actions thereof and be thoroughly aware of its state of affairs. Consequently, any Company incorporated in the territory of the Republic is statutorily obligated to both conduct and hold minutes of an Annual General Meeting at which the Shareholders, Board of Directors and Secretaries of the Company alongside other applicable key personnel must be present and provide an account of the Company’s business conducted or which shall be conducted, alongside additional elements of corporate governance and accountability, presentation of facts and assessment of general affairs. The statutory obligation dictates that within the first 18 (eighteen) months of registering a company in the Republic of Cyprus, such company shall conduct their first Annual General Meeting and retain copies of the resolution taken and minutes. Following this period, the Company shall conduct an Annual General Meeting at least once per calendar year. Extraordinary meetings can be held by a Company, comprising of the same format as the Annual General Meeting, without limitation as to frequency or scope thereof.
ANNUAL RETURNS AND HE 32 FORM OBLIGATIONS
A Cyprus registered company retains the duty to adhere and comply with the applicable legislative provisions on tax declarations. This duty is satisfied on an annual basis by the Company’s filling of the HE 32 form within approximately 40 days following the conduction of the Annual General Meeting of the Company, as detailed in the respective paragraph of this Article hereinabove. The HE 32 Form shall include, inter-alia, the list of Directors serving on the Board of Directors, the Shareholders of the Company as they appear on the Share Certificates, the Secretaries of the Company as they appear on the statutory documents alongside the debentures and liabilities for the specific year in which the form is submitted and is accompanied by the financial statements for the year corresponding to the HE 32 form. The importance of the HE 32 is best highlighted by observing the consequences faced by a Company due to the failure to uphold such duty or performance thereof in a negligent, fraudulent or erroneous manner. The current legislative regime of the Republic of Cyprus prescribes that any person (legal or natural), whether acting alone or in concert with another person (legal or natural), will be held guilty of a criminal offense if it is determined and proven that fraudulent misrepresentations or assertions within the HE 32 form which adversely affects the perception of the Company’s commercial dealings, composition or governance. In addition to being found guilty of the above, with respect to legal persons (companies) it is important to note that the members of the board of directors alongside the managing director and any other executive or shadow officer which is capable of exercising considerable financial management duties shall likewise be held liable if proven guilty.
RECURRENT FISCAL OBLIGATIONS BEFORE THE REPUBLIC
The Government of the Republic of Cyprus imposes the collection of a statutory annual payment from any and all companies registered within the Republic in the form of an annual levy which is fixed for all companies irrespective of the size of their income or scope of operations. The sum of the payment (annual levy) is valued at EUR 350.00 (Three Hundred Fifty Euros) and is payable on an annual basis, at the discretion of the Company, but in no case any later than the 30.06.20XX of each respective calendar year. Failure to uphold this obligation may result in additional financial penalties being imposed on the Company in breach thereof, with further consequence leading to the Company being stricken off the registrar list until full settlement thereof. The required time to re-instate the Company following it being stricken off may vary, with the reinstatement potentially carrying on for up to 2 (two) years, without taking into account potential further obstacles which can not be predicted, as was the case with the COVID-19 global pandemic or other Force Majeure instances. Following the expiration of the 2 (two) year period mentioned above and up to 20 (twenty) years from the date the Company was struck off, any interested party (e.g. director of the company or any of its creditors or anyone who incurred loss or damage before the company’s strike off) may, by submitting a relevant application to the Court, request for the Company to be restored.
CONSOLIDATES FINANCIAL STATEMENTS
Any company incorporated and existing pursuant to the laws of the Republic of Cyprus retains the obligations, irrespective whether any trading or economic activity has been undertaken thereof, to submit on an annual basis Audited Financial Statements. The Audited Financial Statements shall be developed and signed off on by a non-party related Auditing Company displaying a true and accurate depiction of the economic situation within the Company. Such will be used to demonstrate that the Company’s trade is carried out in a legal and transparent manner, that transactions do not breach sanctions or other regulatory regimes imposed by National or European Union entities and justify its activities before the Registrar of Companies. In the event that the company does not have any economic or transactional or business-related activities, the dormant version of Audited Financial Statements shall be produced, procured and submitted in accordance with the legislative regime currently in effect in the Republic of Cyprus.
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