CYPRUS FIDUCIARY ASSOCIATION Tax & VAT Issues for Corporate Administrators ACCOUNTING Stelios Lazarou Member of the board of directors Managing the operations of Limassol office Cyproman Services Ltd www.cfa.org.cy www.cfa.org.cy 1 1
INTRODUCTION Accounting records A record of financial information representing the business activities of a company A company / sole trader will maintain a record of: Balance Sheet or Statement of Financial Position Assets Liabilities Equity Profit & Loss or Income Statement Income Expenses In Cyprus we prepare accounting records in line with International Financial Reporting Standards (IFRS) www.cfa.org.cy 2
ACCOUNTING RECORDS Requirement to prepare accounting records (proper books and records): Under Income Tax and VAT Laws Companies Law Requirement to maintain accounting records: 5 years (give consideration to other legislations) Must be kept at Registered Office Financial statements are prepared and made available to the stakeholders of a Company for: Review of financial position Review of performance www.cfa.org.cy 3
FINANCIAL STATEMENTS: BALANCE SHEET Statement of Financial Position (Balance Sheet) 31/12/2018 31/12/2017 Assets EUR EUR Non-current Assets Investments 90 90 Property Plant and Equipment 10 10 100 100 Current Assets Inventory (stock) 5 5 Debtors 5 - Cash (at bank and in hand) 5 5 15 10 Total Assets 115 110 www.cfa.org.cy 4
FINANCIAL STATEMENTS: BALANCE SHEET 31/12/2018 31/12/2017 Equity and Liabilities EUR EUR Equity Share Capital 10 10 Share Premium 85 85 Retained Earnings 5 10 Total Equity 100 105 Liabilities Non-current Liabilities Loans Payable 5 - 5 - Current Liabilities Trade & Other Creditors 10 5 Total Liabilities 15 5 Total Equity and Liabilities 115 110 www.cfa.org.cy 5
FINANCIAL STATEMENTS: INCOME STATEMENT Statement of Comprehensive Income (Income Statement) For the period For the period 01/01/2018 – 01/01/2017 – 31/12/2018 31/12/2017 Income EUR EUR Sales 100 100 Cost of Sales 80 80 Net Profit 20 20 Administration Expenses Legal fees 3 - Audit & accounting fees 5 5 Finance Expenses - Interest 2 - Net Operating Profit 10 5 Profit before taxation 10 15 Taxation 5 5 Profit after taxation 5 10 www.cfa.org.cy 6
NOTES TO FINANCIAL STATEMENTS • Notes to the financial statements are in line with guidelines from the Auditing Standard and IFRS • Provide explanatory notes on the figures contained within the Balance Sheet and the Income Statement • Standard wording, however can be amended www.cfa.org.cy 7
ANNUAL AUDITED FINANCIAL STATEMENTS Following recent amendments to the Companies’ Law of Cyprus all companies (including Dormant companies) are required to perform an annual statutory audit This should be performed and an audit report issued by a local licensed independent auditors – list of licensed auditors on website of ICPAC (ΣΕΛΚ) the governing body of accountants and auditors Purpose of financial statements is to provide information to users (e.g. shareholders, investors, banks, etc) Annual Tax Returns are prepared based on Annual Audited financial statements www.cfa.org.cy 8
FINANCIAL STATEMENTS – example of how financial statements may be used Declaring Dividends Sufficient Distributable Retained Earnings (see also Statement of Changes in Equity) Consideration of Company’s Financial Position & expected future activities www.cfa.org.cy 9
CONSOLIDATED FINANCIAL STATEMENTS Group: A parent company and one or more subsidiary Requirement for Consolidated financial statements Exemptions from Consolidation The exemption of the Law to prepare consolidated financial statements which previously applied to small groups has been extended to apply to small and medium sized groups (as defined in the law), except where any affiliated company is a public-interest entity or where the obligation to prepare consolidated financial statements is required by other legislations. The provisions for the consolidation exemption where the below occurred has been abolished: • Severe and long term restrictions • Disproportionate cost or undue delay • A investment was held with a view for subsequent sell www.cfa.org.cy 10
FINANCIAL STATEMENTS: ADMINISTRATIVE REQUIREMENTS Annually the following steps are taken: 1. Board of Director approve the financial statements , via board resolution 2. Notice for AGM 3. AGM held 21 days after Notice 4. AGM held to adopt financial statements (first AGM can be held within 18 months, and annually from then on) 5. HE32 completed and filed with the ROC together with adopted financial statements 6. Financial statements filed with the ROC must be fully signed 7. Director and Company Secretary must also sign the front page www.cfa.org.cy 11
Thank you. CYPRUS FIDUCIARY ASSOCIATION Business Address: 1, Menandrou Street, Frosia House, 4th floor, Office 401, 1066 Nicosia, Cyprus P.O. Box 58159, 3731 Limassol, Cyprus Tel.: +357 22 256263 Fax: +357 22 256364 E-mail: info@cfa.org.cy Website: www.cfa.org.cy www.cfa.org.cy www.cfa.org.cy 12 12
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