Which Cyprus Private Limited Companies are now Exempt from Statutory Audits?

On 9 June 2022, the Cyprus Companies Law Cap 113 was updated to introduce a statutory audit exemption for private limited companies and instead these companies will be subjected to an assurance review under much less demanding standards than an audit.  Companies which meet both of the following criteria are exempt from statutory audit:

– Annual turnover of less than €200.000

– Total assets worth less than €500.000

The above criteria should not be exceeded or ceased to be exceeded for two consecutive years.

The above thresholds mean that the vast majority of companies in Cyprus are not required to have a statutory audit but can opt to have their financial statements undergo a review engagement.

Conducting a review engagement instead of a statutory audit applies to the financial statements for reporting periods ending on or after 31 December 2022.

The companies that meet the criteria and choose a review engagement rather than an audit, are still subject to the same filing requirements to the Registrar of Companies and tax filing requirements to the tax department.

What is an assurance review engagement and who undertakes it?

The aim of a review engagement of financial statements under ISRE 2400 (revised) is to provide limited assurance by conducting inquiry and analytical procedures, ensuring that the financial statements are free from material misstatement.

This standard ensures a consistent level of limited assurance while allowing efficient delivery of the service, based on the complexity of the financial statements under review.

An assurance review is an adaptable service, focusing on specific areas of the financial statements to meet a company’s needs. Auditors collaborate with the company to identify high-risk areas, conduct specific tests, and provide recommendations for improvement and informed decision-making.

 

The Companies Law Cap. 113 (Article 152A (1)(d)) specifies that a review engagement can only be performed by a licensed statutory auditor or a statutory audit firm.

Scope

The auditor will determine materiality and acquire a sufficient understanding of the entity to identify potential areas of material misstatements in the financial statements.

Procedures will be tailored to cover all significant items and target areas susceptible to material misstatements. They will include both planned analytical procedures and any supplementary procedures deemed necessary.

Review procedures may include but are not limited to:

–  An analytical review of the year-on-year figures.

– Review of all Financial Statement areas that exceed materiality

– Areas where material misstatements are likely to arise.

– Review of specifically targeted areas within the Statement of     Financial Position and the Income Statement.

– Assessment of significant accounting estimates

– Related party balances and transactions

– Going concern uncertainties 

Auditor’s Review Report

The final step in performing a review engagement is to form an appropriate conclusion based on the evidence obtained. The conclusion of a review engagement does not provide the same level of assurance as an audit opinion. Instead, it typically includes a conclusion of what came to the auditor’s attention. Typically, an unmodified conclusion would read that nothing has come to the attention of the auditor causing the auditor to believe that the financial statements do not give a true and fair view. Similarly to the audit opinion, the auditor can express a qualified, adverse or a disclaimer of conclusion of the financial statements.

Benefits of a Review Engagement

A review engagement of the financial statements as per ISRE 2400 (Revised) is a limited assurance engagement as no audit opinion is provided. Nonetheless there are several advantages to appreciate, often resulting in time and cost savings compared to statutory audit fees. Some of these benefits include:

– Cost-effective and time efficient

– Provides confidence and accountability to the users of the reviewed financial statements.

– Offers reassurance regarding the reliability and credibility of financial statements.

– Identifies issues and areas of concern and offers recommendations for enhancing systems and processes accordingly.

– Focuses on areas where Directors or Owners seek assurance, thus tailoring testing and avoiding unnecessary expenditure of time and fees on processes already deemed satisfactory.

Let Nikita & Partners manage your audit & assurance needs with expertise and proficiency.

Conclusion

Although a review engagement is different from an audit of financial statements, it’s crucial to acknowledge that the inherent risks identified during an audit will still be present. During a review engagement, material misstatements within the financial statements may not be detected, regardless of the thoroughness of the auditor. Nevertheless, a review engagement instills confidence in the users of the Financial Statements regarding critical areas of the accounts. A review engagement offers a practical alternative for those companies that meet the criteria and are not required to undergo a full audit.

Above is a guest article from our associated audit firm Nikita & Partners. It is drafted only for information purposes. You can contact us for more information you may need.

When setting up in a foreign jurisdiction a critical point to avoid any regulatory issues is to understand accounting and filing requirements. Below we provide you with important information on Cyprus Accounting, Tax and filing requirements. 
Asterisk Corporate Services Cyprus

Accounting – Books and Records:

Companies incorporated in Cyprus are required to keep proper books of accounts either at the company’s registered office or at any place designated by the directors.

The books and records of a company are not open to inspection by anyone other than the directors and auditors. The Inland Revenue, as well as the VAT authorities can, however, request the production of any records while examining accounts for Tax or VAT purposes.

The Cyprus Accounting records must show all sums of money received and expensed, all sales and purchases, assets and liabilities. The accounting is to be prepared under International Financial Reporting Standards (IFRS) and financial statements are to be audited or reviewed by a Cyprus licensed audit firm as described below.  

Submission Requirements

The Cyprus Companies Law Cap. 113, prescribes that all Cyprus Companies need to submit audited Financial Statements to the Cyprus Registrar of Companies, once per calendar year alongside the Annual Company Return of the Company (HE32). The first submission can be as long as 18 months after incorporation, but thereafter needs to be once per calendar year. More information on the Annual Company Return requirement can be found below.

Period and Language:

The Financial Period does not need to end 31/12, however, is preferable to have the financial year ending 31/12, so that it coincides with the Tax Authorities period (i.e. Tax year ends 31/12). 

Financial Statements can be prepared either in Greek or English.

Are audits required?

The FS need to be audited by one of the licensed audit firms in Cyprus (we can recommend one of the licensed reputable  audit firms we cooperate with). Audit firms are licensed by the Institute of Certified Public Accountants of Cyprus of which Asterisk Corporate Services is also a member and regulated by.

Update: Further to recent updates in local legislation companies which meet the following criteria can elect not to perform a full audit of their FS but instead have a review of their financial statements from a licensed Cyprus Auditor. The criteria are as follows:

  • The Company must be a private limited liability company and
  • not to be required to prepare consolidated financial statements and
  • but its net turnover and total gross assets should not exceed or should cease to exceed the criteria of EUR200.000 and EUR500.000 respectively in two consecutive financial years.

Additional guidance will be released as the legislation unravels.

Preparation of Accounting records abroad:

Accounting records can be prepared outside of Cyprus (although its recommended to be prepared in Cyprus, as it helps strengthen substance requirements, and to ensure correctness of tax calculations and submissions). If prepared abroad, the Companies Law prescribes that such accounting records (i.e. ones prepared abroad), need to be sent to the Registered Office of the Cyprus Company at least every six months.

Financial Reporting Framework:

Cyprus Accounting & Financial Statements should be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and International Financial Reporting Standards as issued by the IASB and should comply with the Companies Law, Cap. 113.

Annual Company Return (HE32):

As mentioned above, each Cyprus Company, needs to submit to the Registrar of Companies, 18 months after incorporation or once per calendar year, its annual company return. This is a pretty simple return and it includes details of the company’s directors, shareholders, registered office address, secretary etc and its submitted electronically to the Registrar. This process is usually performed by your service provider / corporate secretary in Cyprus and we can assist with such.

You can read more about the Annual Company Return in our dedicated article here.

You can also refer to the Annual Return Date Calculator, which is a tool released by the Registrar of Companies and can give you exact dates by when you need to submit the Annual Return depending on the year of incorporation of your company and/or previous submissions. Penalties apply for late submissions as can be seen in our article linked above.

Consolidated Financial Statements:

If your Cyprus Company will be holding subsidiaries it will be required to prepare consolidated financial statements, unless such consolidated FS are prepared by the ultimate parent company of the group, or unless the group does qualify for the small group exemption.

Contact us for more information on whether your group qualifies for such exemption.

Annual Income Tax Return:

Every calendar year the Cyprus Company will need to submit to the Tax Authorities its Annual Income Tax Return (TD4), based on the audited FS of the Company.

The Income Tax Return is currently due 15 months after the tax year end (for example, for financials years which ended 31.12.2023 the TD4 is currently due on 31.03.2025).

The TD4 includes details of the income/expenses of the Cyprus Company on its worldwide income arriving at the taxable income/loss and its submitted to the authorities based on the audited financial statements of the Company.

Conclusion:

In general, Cyprus has requirements for the submission of Financial Statements and Tax Returns and we strongly recommend to engage an accounting firm, such as Asterisk Corporate Services to assist you with such submissions. Our specialized teams are in place to assist with such work at all times. You can click here to learn more about our Accounting Services & Tax Services.

How Asterisk Corporate Services can assist

Asterisk Cyprus is a regulated ASP & Accounting Firm, licensed by the Institute of Certified Public Accountants of Cyprus. Our specialized teams are in place and ready to assist you with the accounting and filing requirements of your Cyprus Company, providing a responsive cost-effective service offering. 

You can contact us at contact@asterisk.cy for more information.

The above article is aimed to give you a good understanding on the statutory compliance requirements for Financial Statements but does not constitute advise of any kind. For more information contact us.

This is a guest article by our associated specialized accounting firm Asterisk BVI operating bviannualreturn.comBVIAnnualReturn.com is a specialized BVI website solely focused around the BVI Annual Return requirement and how to assist BVI Companies to comply with this new requirement fast and without overpaying. 

BVI Annual Returns are here to stay. Firstly introduced via an order from the BVI Financial Services Commission (FSC) on the 1st of January 2023 requiring all BVI Companies (limited exceptions apply) to prepare and submit an Annual Financial Return with a deadline up to 9 months after the end of the financial year of the BVI Company. 

The BVI Annual Return template as released by the authorities consists basically of a simple income statement and balance sheet. Nothing to stress you about, but basic accounting knowledge is required to correctly complete it. The Annual Return does not need to be audited and it can be prepared under any recognised reporting currency your company uses for its operations (not crypto), and in any of the recognised accounting principles (IFRS, UK GAAP, US GAAP etc).

In addition, penalties will apply for late or no submission. Firstly the Company will be deemed as non-compliant therefore you will not be able to obtain a certificate of good standing, as well as penalties will apply.

To continue with, a hot topic of discussion and one we receive many questions for is whether dormant companies are exempted? The answer is No, and this is because even if dormant the FSC still requires the submission of the Return.

Exempted are only listed companies in recognised stock exchanges worldwide, companies which entered liquidation prior to the end of their financial year end, regulated companies which submit financial statements to the FSC (i.e. Approved Manager entities that are not exempted), as well as companies which file their annual tax return to the BVI Inland Revenue Department accompanied by the company’s financial statements.

Another hot question is whether nil submissions are accepted. The answer in most instances is no (depends on the Registered Agent though), because most companies have share capital and at least Registered Agent and Annual Government fees expenses per year. These will need to be disclosed on the Annual Return.

In terms of Financial Year Ends and deadlines the most commonly used is 31 December in which case the deadline for submission is 30 September 2024. This is the most frequently used financial year end and the most recommended. If however for example the financial year end of your BVI Company is 30 June, then the first financial year runs from 1 July 2023 to 30 June 2024 and the Company has 9 months thereafter to make the submission. Its better to inform the BVI Registered Agent of the Company for any different financial year ends.

Finally, for your ease of reference you can see a copy of the return below. This is the official template as released by the BVI Authorities, only with Asterisk branding:

BVI Annual Financial Return Official Template as released by the BVI Authorities

Summary of important things to know by Asterisk BVI:

  • You will need to submit an Annual Return (income statement and balance sheet) to your BVI Registered Agent;
  • There will be exemptions to this requirement but limited (see above);
  • If your company’s financial year is the calendar year, then your first submission will need to be done until 30 September 2024;
  • No audit is required;
  • You can use the currency in which your company prepares its financial statements;
  • There will be penalties for late submission.
Contact us: Our Specialized Accounting Teams both in Asterisk Cyprus and Asterisk BVI are well educated on the new regulation change and are ready to answer any questions and assist you with the preparation of your BVI Annual Return and relevant accounting records. Drop us an email today at contact@asterisk.cy to see how we can better assist you or visit https://bviannualreturn.com/ for more information.

As you may already know, the BVI Business Companies Act has been amended and effective from 1 January 2023, BVI Business Companies will need to submit an Annual Financial Return (‘Annual Return’) to their Registered Agent 9 months after their financial year end. This BVI Annual Return requirement was also enacted during March 2023 through the BVI Business Companies Financial Return Order which provides details on the form of the Annual Return, examples of the due and filing dates, and details on the filing exemptions.

We analyze this and many more details in relation to the BVI Annual Return Requirement in our article below.

What is the BVI Annual Return?

Further to the BVI Business Companies Act amendments 2022, from 1 January 2023 every BVI Company needs to submit an Annual Financial Return to its Registered Agent.

The Annual Return template consists of a simple Income Statement and Balance Sheet and will not need to be audited. In a nutshell the Income Statement provides information about a company’s revenues, expenses, gains, and losses over a specific period. The Balance Sheet shows a company’s assets, liabilities, and shareholders equity.

When you need to submit

The earliest date an annual return becomes can be submitted (as opposed to when it must be filed) from a company is 1 January 2024. This practically means that if the financial period of your Company is 1 January to 31 December 2023, then the return can be submitted to the Registered Agent of the Company starting from 1 January 2024 with the latest date for submission being 30 September 2024.

Companies with financial year other than the calendar year must file their BVI Annual Return no later than 9 months after their financial year end. For example a Company with financial year end in 31 March, its Annual Return can be submitted starting from 1st April 2024 and has until 31 December 2024 to submit its BVI Annual Return.

Where you need to submit

After the Return is completed it needs to be sent to the Registered Agent of the Company who has responsibility to collect and inform the BVI Registrar on the entities who did not comply with such submission. 

Which BVI Companies are exempted from preparing an Annual Return?

The companies exempted from filing under section 98A(5) of the Act are the following:

  • a listed company, meaning a company that is listed on a stock exchange;
  • a company that is regulated under a financial services legislation and provides financial statements to the Commission in accordance with the requirements of that financial services legislation;
  • a company that files its annual tax return to the BVI Inland Revenue Department accompanied by the company’s financial statements; and
  • a company in liquidation, except that this exemption does not apply if the company’s annual return becomes due for submission prior to the commencement of the liquidation.

Companies in liquidation

For companies already in liquidation, annual returns are not required to be prepared for any financial periods in which the company is in liquidation.  Returns must however be filed in respect of all financial years prior to the commencement of the liquidation.

Privacy of Filed Returns

As the annual returns are filed with the registered agent, the details of such remain confidential and within the custody of the agent, who must make the information available whenever requested pursuant to an obligation under an enactment. For example, the BVI Financial Service Commission may request the information in accordance with the powers granted to it under the Financial Services Commission Act, 2001; such would also be the case with regard to a request by the International Tax Authority under the Mutual Legal Assistance (Tax Matters) Act, 2003, the Financial Investigation Agency under the Financial Investigation Agency Act, 2003 and the Attorney General under the Criminal Justice (International Co-operation) Act, 1993.

Penalties

Based on the amendment the Registered Agent will have an obligation to inform the BVI Financial Services Commission, 1 month after the due date, on the Companies which did not fulfil this requirement. Failure by a company to file its annual return constitutes an offence and may result in fines and the Company not be deemed as in good standing or even result in the name of the Company been struck-off the Register by the Registrar.

Currencies which can be used for the completion of the Return

Any currency can be used in which a Company prepares its financial statements. The reference in USD$ shown in the Annual Return Template can be substituted.

Accounting Standards which can be used in preparing the Return

Currently the BVI Business Companies Act does not prescribe specific Accounting Standards for the preparation of the Annual Return. We (Asterisk BVI) do prepare our accounting records and annual returns in accordance with the International Financial Reporting Standards (IFRS), as they are widely known and used, and also accepted in the BVI.

Does the Annual Return need to be audited?

No, the BVI Business Companies Act 2022 Amendment and the Financial Return Order do not prescribe that the Annual Return needs to be audited.

How you can prepare

As the BVI Annual Return will need to be completed in relation to the 2023 Financial Records and Activities of your BVI Company, we highly recommend you start collecting such documentation as it incurs, as well as engage with a professional from now if you will require any assistance.

Copy of the Annual Return Template:

You can find a copy of the return on our BVIAccountants website in pdf format on our BVIAccountants here. You can also find the template in excel format on our Annual Return Website here.

How Asterisk can help

We at Asterisk specialize in the preparation of BVI Annual Returns, Accounting Records and Financial Statements. We have also created the websites BVIAccountants & bviannualreturn.com where you can find a wealth of information on the Return and get assistance with the Accounting of your BVI entities. You can contact us on how we can better assist you in the completion and submission of the return.

Summary of important things to know:

  • You will need to submit an Annual Return (income statement and balance sheet) to your BVI Registered Agent;
  • There will be exemptions to this requirement but limited (see above);
  • If your company’s financial year is the calendar year, then your first submission will need to be done until 30 September 2024;
  • No audit is required, unless you wish for your own purposes;
  • You can use the currency in which your company prepares its financial statements;
  • There will be penalties for late submission;

Further clarifications

Please note that more clarifications on the exemptions and other information in relation to the BVI Annual Return may be released by the BVI Financial Services Commission during the year.

Disclaimer

Please note that the above article is for informational purposes only and does not constitute any form of advise. For more information you can contact us.

You can email us at contact@asterisk.cy or contact@bviaccountants.com for more information and clarifications.

Wondering how to easily submit your BVI Annual Return?

If you’re a business owner in the British Virgin Islands (BVI), you may be aware of the new requirement of the BVI Business Companies Act (amendments 2022) to prepare and file an Annual Financial Return.

This requirement has only become effective from 1 January 2023, and requires all BVI Companies (limited exceptions apply) to prepare and submit to their Registered Agent an Annual Financial Return. The Annual Return is basically a simple Income Statement and balance sheet and will need to be submitted to the Registered Agent of each Co maximum 9 months after the financial year end of each Co. First submissions are expected in 2024.

We understand that you know how important it is to file your BVI annual returns on time. But preparing these returns can be time-consuming and overwhelming, especially if you’re not familiar with the process. Our firm specializes in such submissions and we’re excited to announce the launch of our new website, AnnualReturn.vg which focuses in the preparation of such Returns and education of business owners on such requirement aiming to make this new submission requirement easier for you.

On our new site you will be able to find a wealth of information regarding the BVI Annual Return, the templates requested as well as answers to important questions. Qualified accountants specializing on this requirement will be able to serve you in an efficient and cost-effective manner so that you are done with this requirement in no-time.

How we can assist:

Our service offering includes 3 packages:

  • File with a professional, for cases when you can prepare the BVI Annual Return yourself but have some questions / need some guidance on how to do so;
  • Preparation of Accounting records and Annual Return where we will prepare the accounting records of your BVI Company based on the financial records of the Co (invoices, agreements, bank statements etc) and prepare the annual return.
  • Preparation of Accounting records, Financial Statements and Annual Return. In addition to point 2 above we will also prepare unaudited Financial Statements for your Company under International Financial Reporting Standards (IFRS) with full set of accompanying notes.

What you can expect:

  • Exceptional client service: Our mission is simple: to provide you with the same high-quality service that we would expect for ourselves. Embracing this moto in our culture, we always strive to provide our clients with the best service possible, efficient, responsive and cost-effective.
  • Affordable pricing: We understand that preparing BVI annual returns can be expensive, which is why we offer affordable pricing plans that suit different budgets.
  • Expert support: Our team of accounting experts is always available to answer any questions you may have and guide you through the process.
  • Secure and reliable: We take data security seriously, which is why our website is built with the latest security protocols. You can be confident that your information is safe and secure with us.

To learn more information please visit annualreturn.vg. We are there to guide you along the way.

Don’t let the stress of preparing your BVI annual returns weigh you down. With our new website, you can file your returns quickly and easily, giving you more time to focus on growing your business. Try our platform today and see the difference for yourself.

A guide to accounting for digital assets and cryptocurrencies

What are Crypto assets?

A crypto asset is any digital asset built using blockchain technology. This includes cryptocurrencies, stablecoins such as Tether (USDT) which are assets designed to track the price of an underlying asset therefore minimising price volatility, and security tokens which are the digital form of traditional equity or fixed income securities.

What are Cryptocurrencies?

Cryptocurrencies are a subcategory of crypto assets. They are designed to work as a medium of exchange, store of value or to power applications. The IFRS Interpretations committee considered cryptocurrencies with all the following characteristics:

    1. a cryptocurrency that is a digital or virtual currency recorded on a distributed ledger and uses cryptography for security.
    2. a cryptocurrency that is not issued by a jurisdictional authority or other party.
    3. a holding of a cryptocurrency that does not give rise to a contract between the holder and another party.

How are they accounted for in the books of the holder?

The accounting treatment of cryptocurrencies will primarily depend on the intentions of the entity holding them and the way these assets are held e.g., whether the entity is holding the crypto assets directly or its crypto assets are held through a crypto – exchange. 

The IFRS Interpretations Committee concluded that IAS 2 Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business. If IAS 2 is not applicable, an entity applies IAS 38 Intangible assets to holdings of cryptocurrencies.

IAS 2 Inventory

Inventories include assets that are held for sale in the ordinary course of business, assets in the production process for sale in the ordinary course of business, and materials and supplies that are consumed in production.

IAS 2 does not require inventory to be tangible.

IAS 2 requires measurement at the lower of cost and net realisable value

The costs of an acquired crypto asset would normally comprise its purchase price and any costs directly attributable to the acquisition of the crypto asset, such as processing fees.  As per IAS 2 net realisable value is defined as the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Fair value less costs to sell

A commodity broker-trader acquires and sells crypto assets to generate profits from price fluctuations or broker traders’ margin. These assets are therefore held for sale in the ordinary course of business. In such a scenario, the commodity broker-trader has the option to measure their inventory of crypto-assets at fair value less costs to sell. However, without an active market’s determination of an assets fair value, determining the fair value would be very challenging for the entity.

IAS 38 Intangible asset

An intangible asset is defined as ‘an identifiable non-monetary asset without physical substance. An asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.

Therefore, the essential characteristics of the definition of intangibles are:

  • They are identifiable
  • They lack physical substance
  • Controlled by the entity
  • Will give rise to future economic benefits 

Initial Measurement

Crypto assets are accounted for as intangible assets with indefinite useful life and are initially measured at cost. The cost of acquiring crypto assets would generally involve expenses such as the buying price and additional transaction costs, which may include blockchain processing fees.

Subsequent measurement

Cost model

The cost method under IAS 38 entails subsequent measurement at cost less  amortisation and impairment. In most cases, no amortisation is expected for cryptocurrencies. The Crypto assets are subject to impairment if their fair value decreases below it’s carrying amount. The fair value is measured using the quoted price of the crypto asset at the time its fair value is being measured. The impairment loss is recognised in profit or loss.

Revaluation model

The revaluation model can only be applied to crypto assets if the fair value can be determined through an active market as this is defined by IFRS 13. 

Under the revaluation model, crypto assets are measured at their fair value on the date of revaluation less any impairment losses. The increase in fair value over the initial cost of the intangible asset is recorded through other comprehensive income in the revaluation reserve. A net decrease below cost is recorded in profit or loss. 

It is important to note that these guidelines are not exhaustive, and the treatment of crypto assets under IFRS may vary depending on the nature and circumstances of the crypto asset.  Companies should seek professional advice to ensure accurate accounting treatment of crypto assets under IFRS.

This article is a repost from our associated Audit firm Nikita & Partners

Today, here at Asterisk Corporate Services, we are proud to present you with our new bespoke solution – preparation of custom Accounting Policies and Procedures Manual

We identified the need for this service as there are a lot of medium to large organizations growing rapidly, especially in the Crypto and Tech sectors which are in desperate need to streamline their accounting department(s) and ensure efficiencies across the board. 

It is of significant importance for an organization to ensure efficiencies and that the Accounting Department is working well, as if not, there are a lot of bad things which can happen, such as loss of funds, fraud, non-compliance with regulations, difficulty in onboarding new employees etc. 

In that respect, our Accounting & IFRS (International Financial Reporting Standards) experts are in place to assist you in drafting a tailormade, bespoke Accounting policies manual, which will greatly assist you in streamlining your procedures, ensure compliance with regulatory requirements, establish and maintain internal controls and others.

Our manuals cover all aspects of accounting, including accounts payable, accounts receivable, general ledger, and financial reporting. Our team stays up-to-date with the latest accounting standards and regulations, ensuring that your manual will always be compliant.

Our manuals are also designed to be user-friendly and easy to understand, so that even non-accountants can follow the procedures outlined. This makes training and onboarding new staff much smoother and less time-consuming.

Its worth noting that we do offer this service not only to Cyprus Companies, but globally, as long as your entity is using IFRS for its reporting requirements.

To proceed with please see below some examples on why its good to have an accounting policies manual, as well as what benefits it can bring in your organization:

Why your organization need an Accounting Policies Manual:

  • To ensure compliance with industry standards and regulations such as IFRS;
  • To improve accuracy and efficiency in your accounting operations and reduce errors;
  • To standardize and ensure consistency in accounting practices;
  • To establish and maintain proper internal controls;
  • To provide clear guidelines for accounting staff and facilitate better communication and training.

Benefits from having an accounting policies and procedures manual

As businesses navigate in todays challenging and everchanging environment, which is full of constant changes and regulatory requirements, your accounting department plays a significant role in ensuring smooth operations, reducing costs and avoiding unpleasant surprises. Having a comprehensive accounting policies and procedures manual in place can make all the difference in ensuring that your accounting processes are efficient, compliant, and effective. Here’s why you need one:

  • Streamlined processes: A manual lays out clear procedures for day-to-day accounting tasks, making it easier for your accounting team to complete their work with fewer errors and less time wasted.
  • Improved efficiency: By having a standardized set of procedures in place, your accounting department can focus on high-value tasks instead of trying to figure out how to complete routine tasks.
  • Compliance with accounting standards: Keeping up with the latest accounting standards and regulations can be challenging, but our manuals ensure that you’re always in compliance with the IFRS.
  • Easy onboarding of new staff: A comprehensive manual makes it easier for new staff to get up to speed, reducing the time and resources needed for training.
  • Peace of mind: Knowing that your business is following best practices and is in compliance with industry standards can provide peace of mind and reduce the risk of errors or non-compliance issues.
  • Reduce costs: Ensuring efficiencies and correct controls can help reduce costs and increase profitability.

“Invest in a custom accounting policies and procedures manual today, and experience the benefits of a streamlined and compliant accounting process.”

In light of the above, don’t wait any longer, contact us today to discuss how we can help you achieve your business goals through a custom accounting policies and procedures manual.

In today’s competitive business environment, every euro counts. One way for businesses to keep more of their hard-earned money is to reduce their business tax liability. By understanding the various tax deductions and credits available to them, businesses can lower their tax bill and keep more money in their pockets. In this article, we will explore various strategies for reducing business tax liability, including deductions, as well as credits for initiatives such as research and development and hiring employees from certain disadvantaged groups. By taking advantage of these opportunities, businesses can save money on taxes and invest in growth and expansion. Please note that this article is not location specific to Cyprus, rather than an attempt to give you a general understanding to start thinking on how to reduce your tax exposure. 

  1. Understand your tax obligations: The first step in reducing your business’s tax liability is to make sure you understand what taxes you are required to pay, and when they are due. This includes not only federal and state income taxes, but also any local taxes that may apply to your business, as well as employment taxes for any employees you have. This always depends on the jurisdiction your Company is based, as well as the jurisdiction of the beneficial owner(s). 
  2. Take advantage of deductions and credits: There are many deductions and credits available to businesses that can help reduce their tax liability depending on the jurisdiction at which you are operating. Some common examples include deductions for business expenses such as rent, utilities, and supplies, as well as credits for hiring employees or investing in certain types of equipment. 
  3. Consider changing your business structure: The type of business structure you choose (e.g. sole proprietorship, partnership, corporation) can have a significant impact on your tax liability. For example, a corporation may be subject to double taxation (once on the corporate level and again on the individual level when profits are distributed to shareholders), whereas a sole proprietorship or partnership may not be.
  4. Keep good records: Good record keeping is essential for any business, but it is especially important when it comes to reducing tax liability. By keeping track of all your income and expenses, you can ensure that you are claiming all the deductions and credits you are entitled to, and avoid any costly mistakes or errors.
  5. Work with a tax professional: Tax laws are complex and can be difficult to navigate, especially for small business owners who may not have a background in accounting or finance. Working with a tax professional, such as a certified accountant (ACCA, ICAEW or CPA), can help you identify strategies for reducing your tax liability and ensure that you are in compliance with all relevant laws and regulations.

Conclusion:

In conclusion, reducing business tax liability is crucial for any business looking to maximize profits and invest in growth and expansion. By understanding and taking advantage of the various tax deductions and credits available, businesses can lower their tax bill and keep more money in their pockets. Some strategies for reducing business tax liability include deductions for common expenses such as employee salaries and equipment purchases, as well as credits for initiatives such as research and development and hiring employees from certain disadvantaged groups. By staying informed and proactive about tax planning, businesses can save money on taxes and put it towards investments that will drive their success in the long run.

Disclaimer: Please note that this article is not location specific, it is not meant to be exhaustive and it should only act as reference. We recommend to always seek for professional advise when not sure.

One of the most frequent questions we receive at our BVI site – bviaccountants.com – is whether the British Virgin Islands (BVI) Business Companies Act requires BVI Business Companies to prepare and submit Financial Statements (FS) and Annual Returns.

Prior to the 1st of January 2023 the BVI Business Companies Act did not require BVI Business Companies to perform any submissions of Financial Statements or any Annual Returns unless the entity was regulated (depending on regulation). However, from 1 January 2023, following amendments to the BVI Business Companies Act, all BVI Companies (limited exceptions apply) are required to submit to their Registered Agent, an Annual Return, which will basically be a simple one page Income Statement and Balance Sheet which will need to be completed based on each Company’s financial records (final template not realeased yet). 

The Annual Return will need to be submitted to the Registered Agent 9 months after the financial year end of each Company. For example, a Company with Financial Year End 31/12 will need to submit its Annual Return by the 30th of September of the following year. Failure by a company to file its annual return constitutes an offence and may result in prosecution or a fine. The Registered Agents will need to inform the BVI Registrar 1 month after the deadline in cases where a Company fails to submit its Annual Return. 

Exemptions for this annual submission will apply to listed companies, regulated companies which provide financial statements to the commission, and Companies which file annual tax returns accompanied by FS to the BVI Inland Revenue Department. Such entities will not have to submit an Annual Return.

The Annual Return will not need to be audited. 

Key Takeaway: In light of the above, please be prepared and aware that you will need to submit such an unaudited Annual Return to your Registered Agent once per financial year for your BVI Company. Contact us today on how our BVI office can assist you with preparation of BVI Entity Financials and Annual Returns. 

Financial Records – What they are and why they are needed

To continue with, please note that the requirement to keep Financial Records is still applicable for BVI Companies. The BVI Business Companies Act (which can be found hereprescribes on Article 98 that BVI Companies need to keep Financial Records which will support the financial transactions of the Company for a period of five (5) years from the date of the transaction. Such address can be anywhere in the world, but it needs to be known by the Registered Agent of the Company. Financial Records can be anything from invoices, agreements, bank statements, board of directors resolutions approving a transaction and any other documentation of accounting significance. 

In addition to the above, any BVI Company which wishes to prepare a full set of Financial Statements for any other reason can still proceed with doing that. Financial Statements can be prepared for any purpose, such as requirement from Banks, Tax Authorities in the country of domicile of the UBO, good governance practice etc. These Financial Statements will differ from Annual Returns in the sense that Financial Statements come with full set of notes and more information that the Annual Return will require. 

Summary: In short, yes, your BVI Business Company will most likely need to prepare Accounting Records so that to be able to correctly complete its Annual Return from 1/1/2023. This requirement has arisen during August 2022 as the BVI Financial Services Commission has passed amendments to the BVI Business Companies Act. These amendments are effective from 01 January 2023 and will require for BVI Business Companies to submit to their Registered Agent an Annual Return once per calendar year. Penalties will apply to entities which do not comply to this requirement. The template of the Annual Return has not been made available yet, but its expected to be a simple Income Statement and Balance Sheet. There will not be a need for an audit. We will provide you with more information as the legislation and regulations unravel. 

How Asterisk can help:

Through our BVI Co and specialized BVI Accounting website https://bviaccountants.com we can assist with preparation of the Annual Return, Accounting Records and full set of Financial Statements for BVI Entities. We can also provide you with any information you may need through our huge knowledge database we have drafted for BVI Entities. Contact us today on how we can assist you.

Does my BVI Company need to prepare Financial Statements?