Tax Checklist

Client: Period: --/--/201- /
Subject: Income Tax Provision Checklist Auditor:

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Objectives

Within the overall objective of ensuring that the financial statements present a fair view of the client's financial position and the
computation of Income Tax and other related taxes has been properly done in accordance with applicable laws and regulations,
the objectives regarding taxation are to ensure that:

1. Adequate disclosure has been made in the financial statements in respect of company tax liabilities and have been dealt
with properly.

2. Tax computations have been prepared with due care and diligence in line with tax requirements and in compliance with
laws and relevant tax circulars, notices and other regulations applicable to the individual circumstances of the audit client.

3. Adequate provision has been made for any taxes being borne by the company according to Cyprus Tax Law and relevant
Regulations.

4. As auditors, we have applied professional auditing standards in ensuring the above, within the context of our overall
responsibility to test and if appropriate rely on the systems of controls or carry compliance or substantive testing.

Conclusion

It is my opinion that subject to the matters listed on the list of outstanding items:

1. Adequate provision has been made for company tax and other relevant tax liabilities.

2. Appropriate disclosures have been made of the overall taxation position on a basis consistent with the previous period.

Signed ........................…........................... Date ......................................

Partner/Manager (Tax)............................... Date ......................................

Work done

The previous year's tax computation, annual returns, tax assessments, appeals statements and subsequent letters have been
reviewed together with the estimates for the current period to achieve the above objective. The file contains a copy of the
previous year's return and a memorandum signed by a tax manager/partner of work done in the tax review.

Εν.Tax-9-εκδ1-20110601 Income Tax Provision Checklist copyright reserved: AS&Co

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A. General
1. Audited accounts for the period are available or working of provision for tax is
based on latest updated draft of the accounts.

2. Details of income and expenditure is classified and apportioned under the
types:

I. Income from business activities

II. Income from property

III. Income under capital gains

IV. Income from other sources
V. Foreign source income

3. In case of a company, income from business has been accounted for on accrual
basis. Other basis is not allowed unless specifically provided for under tax
laws

4. In case of long term contracts percentage of completion method has been used.
Long term contract is a contract for manufacture, installation or construction
etc., which is not completed within tax year and is for a period of more than
six months.

5. Specific Provision for bad debts has made during the year, has been dealt with
as allowable expense for tax.

6. Bad debts written off against provisions disallowed during preceding years
have been claimed as allowable deduction.

7. Where an asset has been disposed off under a non-arm’s length transaction, the
fair market value of the asset at the time of disposal has been treated as its sale
price of the seller and cost for the purchaser.

8. No gain or loss has been considered on the disposal of an asset other than as a
genuine sale or disposal.

B. Income from Business
9. Admissible deductions against business income

Whether or not the following expenses have been claimed.


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10. All expenditure incurred for the purpose of deriving income from business
chargeable to tax has been claimed as an allowable expenditure.
11. Capital allowances (on the basis of number of months used or other
appropriate basis) have been claimed in accordance with tax laws.

12. Any amount of tax deducted at source under the provisions of the law has been
recognized.

13. Any salary, rent, payment to non-resident, payment for services or fee from
which tax required to be deducted at source has been deducted.

14. Any entertainment expenditure in excess of prescribed limits has been
disallowed.

15. Any contribution made to a fund that is not a recognized provident fund, an
approved superannuation fund, or an approved gratuity fund has been
disallowed;

16. Any fine or penalty paid or payable for the violation of any law, rule or
regulation has been disallowed;

17. Any personal expenditure incurred has been disallowed;

18. Any saloon motor vehicle expenditure has been disallowed;

19. Any ‘personal use’ of assets or other utilities has been disallowed;

C. Income from Property
20. Where any rent receivable from property/other asset and irrecoverable rent
subsequently recovered, have been included in taxable income;

21. Any deduction claimed in respect of income from property has not been
claimed against income from any other source;
Whether or not the following deductions / expenditure against
property income have been claimed.

22. In respect of repairs/related expenses to the building, an allowance equal to
25% of the rent chargeable to tax has been claimed as tax deductible.

23. The amount of any insurance premium paid to cover the risk of damage or
destruction to the property.


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24. The amount of any local tax, charge or other related expense in respect of
property or income from property other than any tax payable under the
Income, has been claimed.

25. Where the property has been acquired, constructed, renovated or reconstructed
with borrowed capital, the amount of any interest paid on such capital;

26. Where the property is subject to mortgage or other capital charge, the amount
of interest / profit paid on such mortgage or charge;

27. Any unpaid rent which is considered irrecoverable has been deducted from
rent income;

28. Any rent received or receivable in respect of the lease of a building or plant
and machinery has been treated as taxable income;

D. Income under the head Capital Gain
29. Gain arising on the disposal of immovable property (land and buildings), other
than a gain that is exempt from tax, has been accounted for as tax under
“Capital Gains”.

30. The cost of acquisition of immovable property and any expenditure incurred
wholly and exclusively for acquiring or developing such asset has been
claimed as deduction against income capital gains.

E. Income from other sources
31. Income of every kind received in the tax year, if it is not included in income
from the main business activities, other than income exempt from tax, has been
included in the tax computation. Including the following namely:
a. dividend;
b. rent from the sub-lease of land or a building;
c. income from the lease of any building together with plant or machinery;
d. any amount received by the owner of a property in respect of provision of
amenities, utilities and any other services in respect of that property.

F. Payroll G H
. .
32. All payroll expenditure included in the financial statements is properly
reconciled with IR 63sumbitted to Inland Revenue;

33. All PAYE deductions were properly calculated;

34. All employees have signed form IR 59 (declaring their tax status, deduction
claims and other relevant information)


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35. Amounts described as “Subcontracting expenses” “Casual Labour” or under
similar descriptions, are properly supported either by a Tax Invoice (with full
details and Tax/vat Registration) or other documentation and are justified to be
excepted from deduction of PAYE;

G. Other matters A B
. .


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