What is Corporation Tax?

Corporation tax is a tax that is levied on limited companies, as well as certain other entities such as charities, clubs and societies. Specifically, it is a tax on both taxable income and capital gains (chargeable gains.) If you’re a business based in the UK then you’ll have to pay corporate tax on all taxable profits, regardless of where you trade.

However, if your company is not based in the UK, then you will only have to pay corporation tax adhering to UK law on taxable profits from your UK activities.

The rate of corporation tax differs around the world. Many countries, that are sometimes referred to as tax havens, will have relatively low levels of corporation tax.

One of these countries is Cyprus, which has the lowest corporation tax rate in the EU of 10%, although not a tax haven. To qualify for this rate a company must be tax-resident in Cyprus, i.e. your company must be managed and controlled in Cyprus. Where about do your board of directors meet? As this can help determine where your company’s control is based.

Corporation tax is just one of the taxes that your company might face, other taxes include capital gains tax and immovable property tax. To lessen your tax liability you may consult Cyprus corporate services professionals, who may be able to advise you in regards to company formation in Cyprus.