On 28 January 2021, the Commissioner of Taxation notified the institute of Certified Public Accountants of Cyprus (“ICPAC”) that the deadline for the payment of Special Defence Contribution on deemed dividend distributions (Code 0623) for the tax year 2018 is extended by three months, from 31 January 2021 to 30 April 2021, without the imposition of penalties/ interest.
In his letter to ICPAC, the Commissioner of Taxation explained that the extension is given as a result of the Covid-19 pandemic and of certain ambiguities that exist. It is our understanding that these relate to the tax treatment of certain financial reporting matters which may impact the determination of profits that are subject to the deemed dividend distribution rules.
Furthermore, a relevant amendment in the Special Defence Contribution Law which provides for the extension, was published in the Official Gazette of the Republic on 9.2.2021.
Lastly it is noted that the extension also applies in respect of contributions towards the General Healthcare System (‘'GHS'') that are due as a result of deemed dividend distributions (Code 0723) for the tax year 2018.
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