The Circular is in response to an issue that has arisen between the Tax Department and the Registrar of Companies and Official Receiver (the “Registrar”) in relation to the Registrar’s obligation to strike off dormant companies or companies for which the appointed local service providers have lost communication.
The Registrar, in accordance with the relevant legislation, is obliged to take steps to strike off those companies which have not complied with their statutory obligations, such as the filing of annual returns. However, for any of the companies that have outstanding tax obligations, the Tax Department has objected to the strike off application, resulting in those companies remaining in the register, and thus, preventing the finalization of the deregistration procedure indefinitely.
The Circular advises that the Tax Department will consider providing consent to the strike-off application for companies which:
- are dormant, or for which every communication has been lost;
- have not fulfilled their obligations with the Tax Department; and
- wish to be deleted from the register of the Registrar;
in circumstances where the service providers of the respective companies take the following steps in order to assist in the process:
- the service providers submit the relevant returns (Income Tax Return Form or and VAT Form) on behalf of the said companies for all the years for which it is feasible to do so; and
- the service providers submit to the Tax Department by 31 March 2019 the applicable forms, namely, the T.D163A_ DOR 2018 (for all dormant companies) and IR.163A_ CONT 2018 (for companies for which communication has been lost), setting out certain required information for the companies, including:
details about the director(s) and the ultimate beneficial owner(s);
- details of any resignation letter submitted by the service provider resigning from the position of the secretary or director; and
- confirmation that certain documents held by the service provider are available for inspection by the Tax Department.
In case the service providers do not comply with the requirements set out in the Circular, the Tax Department will maintain its objection to the strike off application and will take such legal actions as it considers appropriate in accordance with the provisions of the applicable law.
It is important to note that only upon review of the collected data, will the Tax Department decide whether it will give its consent to the applications to strike off various companies from the register.
It is questionable whether this proposed procedure will in practical terms address the issue, or indeed whether it is at all feasible, especially with regard to those companies for which the service provider has resigned as director or secretary.
For further information on this matter please contact Constantinos Christofi or your usual contact at Elias Neocleous & Co LLC.