A Transfer Pricing Strategy and Service is an essential component for intra-group transactions. It is required to document the arm’s length remuneration charged by related parties. International tax laws are governed by the Organization for Economic Cooperation and Development (OECD) and significant changes take place over time due to the Base Erosion and Profit Shifting (BEPS) Project, the Taxation of the Digital Economy initiative and the COVID-19 Global pandemic impact. On 30 June 2017, the Cyprus Tax Authorities (''CTA'') issued guidelines in respect of back to back loans. On 30 June 2022, the Cyprus Parliament approved the new transfer pricing strategy and service guidelines on a broader scope of related party transactions. Particularly, as from 1 January 2022, a Cyprus tax resident company or a Cyprus permanent establishment of a non-Cyprus tax resident company engaged in related party transactions, is required to prepare a Master and Local File, subject to certain exemptions. In addition, a summary table needs to be prepared on an annual basis, disclosing details regarding related party transactions. Failure to comply with the new requirements, certain penalties will apply. The new pricing rules include procedures in respect of Advance Pricing Agreements (''APA''). Cyprus tax resident persons and Cyprus permanent establishments of non-Cyprus tax resident persons may submit to the CTA an APA Request in respect to current or future domestic or cross border Controlled Transactions. Our dedicated team is ready to provide services such as: • A Study in respect of loans, services and royalties; • A Study in respect of allocation of profits between a Head Office and Permanent Establishment • Assistance with the preparation of Master and Local File. • Assistance with the APA requests either unilateral or bilateral/multilateral. You like what you see? Feel free to reach out to us at taxcom.cy to go over all your transfer pricing strategy and our services to see how we can help you move forward.
