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The Cyprus tax system is based on the OECD Transfer Pricing Guidelines and local legislation. This article will discuss the Cyprus Tax System and the documentation requirements for controlled transactions between related parties.
The Cyprus Tax System requires annual filing of local and master file documentation to the Cyprus Tax Authorities. This applies to all companies that are tax residents of Cyprus and involved in controlled transactions with related parties. The documentation should include all transactions between related parties. It should follow the OECD Transfer Pricing Guidelines.
The Cyprus Tax System requires companies filing taxes to comply with the Income Tax Law and the Arms Length Principle. This is mandatory for all companies in Cyprus. All transactions between related parties must adhere to the Arms Length Principle. Additionally, these transactions must have supporting Transfer Pricing Documentation.
Companies engaging in cross-border transactions with related parties must comply with the Advance Pricing Agreement (APA). This applies if the revenue for any given tax year exceeds or should have exceeded €50 million. This is an agreement between the Cyprus Tax Authorities and the tax payer. It outlines the pricing guidelines for multinational enterprises.
Cyprus Tax Authorities recently updated the Transfer Pricing Documentation requirements. These requirements apply to all companies that are Cyprus Tax Residents. Additionally, they must have consolidated revenue exceeding €20 million in a given tax year. This new requirement will be effective from June 2022, when the new Cyprus Parliament will be in place.
Companies in Cyprus must follow the OECD Transfer Pricing Guidelines and relevant laws if they are subject to taxation. These rules apply to any transactions with related parties.
This includes filing the local and master file documentation with the Cyprus Tax Authorities, complying with the Arms Length Principle and if the revenue exceeds or should have exceeded €50 million in any given tax year, having an Advance Pricing Agreement (APA). The Cyprus Tax System also requires that all companies with consolidated revenue exceeding or should have exceeded €20 million in any given tax year must comply with the updated Transfer Pricing Documentation requirements, effective from June 2022.
We are leaders in transfer pricing services in Cyprus. We aim to provide quality consultations for all your tax needs and treat each client whether in Cyprus or abroad with upmost care.