10 January 2023,
Amendments to the Cypriot Income Tax and the Assessment and Collection of
Taxes Law – Transfer Pricing rules.
Effective as of 1 January 2022
On 30 June 2022, the Cyprus parliament has voted into law the long-anticipated documentation requirements on transfer pricing (law and regulations). The law and regulations are aligned with the recommendations set forth in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
The transfer pricing documentation requirements apply to Cypriot tax resident persons and Permanent Establishments (PE’s) of non-tax resident entities for certain transactions with their related parties. The aim of the new law and regulations is to ensure compliance of covered entities with the arm’s length principle.
The TP rules introduced the content of the TP Documentation Files:
ii. The Master File contains high level of information about the international business operations of a multinational group and should meet the requirements set in the OECD such as 1) Consolidated Revenue more than €750 million and 2) The Ultimate Parent Entity or Surrogate Parent Entity of the group is a Cyprus Tax resident Company. Penalty imposed for late submission of up to €20,000 based on the days passed.
iii. The Summary Information Table is form that should include the taxpayers related party transactions. The categories of transactions is Goods, Services, Royalties and Other Intangibles, Financing Transactions and others. The Summary Information Table is applicable to all taxpayers that are engaged in related party transactions and there is no threshold. The information should be submitted to the tax authorities on an annual basis, same like the Income tax return. Penalty of €500 for late or non-submission.
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