When it comes to Cyrus company formation, there are certain rules and regulations that entrepreneurs and business must adhere to in order to operate their business, including the need to pay for corporate tax. The country has a favorable taxation regime that’s why a lot of foreign investors are very interested in registering their company in Cyprus.
What does Corporate Tax Mean?
Corporate tax refers to the tax placed on the taxable profits of companies and other profitable organizations, such as societies, associations, clubs and unincorporated entities. The taxable profits include the profits from capital gains, also called as chargeable gains, and taxable income, including investment or trading profits.
Organizations and companies based in the UK are expected to pay a corporate tax on every taxable profit, regardless of where in the world the profit comes from. Once a company is operating in the United Kingdom, but is not based in the country, like operating through a branch or an office, the corporate tax must then just be paid on taxable profits that arise in the UK.
How to Pay for Corporate Tax?
To make sure that your business is paying the required tax, your corporation has to register for corporation tax as part of establishing a private limited company within 3 months of the beginning of the trade (e.g. receiving payments and making sales.) As a corporation, you are responsible for keeping accurate accounting records that you can use in preparation for the annual tax return of your company.
Corporation tax is actually paid on every profit earned by the company of business, which include the trading profits, investments and the money made from chargeable gains or selling assets.
Also, business tax is imposed on every relevant business entity at the end of each accounting year. It is charged for the profits accumulated during the accounting periods of the business. The tax must be paid within the deadline. Filing of tax return should be completed twelve months after the end of the period of accounting.
If correctly structured, a company in Cyprus can conduct an international business in a tax efficient manner. Cyprus company formation enables business owners to legitimately conduct a business in the country and internationally subject to a tax rate of only 12/5 percent, which is among the lowest rates in the EU. Also, Cyprus is ranked as the twentieth freest economy in the world in the 2012 Index of Economic Freedom conducted by the Heritage Organization.