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As per the Special Defence Contribution Law, Companies which do not distribute at least 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, will be deemed to have distributed as dividends 70% of these profits.
 The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable by the Company for the account of the shareholders.
Deemed Distribution of Dividends is applied when the ultimate beneficial shareholders are both Cyprus tax residents and Cyprus domiciled.
As per the Special Defence Contribution Law when the shareholder of a company is another company and there is an actual distribution of dividends then there is no withhold tax.
Companies which have accounting profits  for the year ended 31 December 2016 and they will not  distribute at least  70% of the accounting profits as dividends  until 31 December 2018, then those profits are subject for deemed distribution.
The Special Defecne Contribution for dividends is payable by the end of the month which follows the month of distribution.
As far as the payment is concerned, we inform you that as from this year the Special Defence Contribution should be paid only through the electronic portal of JCC Smart. If you do not have a JCC Smart account, we can do the payment on your behalf.  In such a case please let us know on time.
We would be happy to assist you in filing on time the appropriate deceleration with the Tax Department and the payment of the tax in order to avoid any fine and interest.

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Should you need any further information or explanations please do not hesitate to contact us.