Related Party
Transactions

Income tax laws – Related party transactions

• Under current legislation, the Commissioner has the right to adjust the value of transactions between related parties, if such transactions are not carried out on an arm’s length basis. Based on current practice, the Commissioner in the case of transactions between two Cyprus tax resident companies does not grant a corresponding deduction to the other party for income adjusted for the first party.
• The law is amended so this anomaly is corrected and in case of an adjustment in the income of the one party, a corresponding deduction should be given to the other party to the transaction.

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