Insider Business Cyprus to adopt new Transfer Pricing regime

Cyprus to adopt new Transfer Pricing regime

After consulting with professionals in the Mediterranean island’s service sector the Finance Ministry is drafting a bill on Transfer Pricing guidelines.

The Transfer Pricing regime concerns tax treatment of intra-group financing transactions. The draft bill aims to put an end to the over-pricing of intra-group invoices so that any low tax rate that may apply in one country can be exploited.

It is a bill that will harmonise Cyprus with the Organisation for Economic Co-operation and Development (OECD’s) guidelines. And even though this has not been requested by foreign authorities, Nicosia judged that it is a development that needs to be made so that Cyprus complies with international best practices and not be accused that it erodes tax bases of other countries.

Substantially, the new legislation will cover all types of transactions whose costs are over €750 thousand per year. In other words, a Group should document that the charges it has made for these transactions are correct and are the same as those that would be charged for transactions with third parties in order to avoid the phenomenon of transferring profits to countries with lower tax rates.

The relevant draft legislation has been completed and sent to the Legal Service for review.

Costas Markides, who is a member of the Institute of Certified Public Accountants of Cyprus and coordinator of the subcommittee on this, told INSIDER that the legislation drafted by the competent Ministry and more specifically by the Tax Office is definitely a step in the right direction. And that it is fully in line with transparency efforts that Cyprus has consciously adopted over the recent past years.

“Cyprus has a relatively low corporate tax rate (12.5%) and it is very important to be able to document to relevant tax authorities within and outside Europe that income received by Cypriot parent companies as well as  subsidiaries by a Group is in line with international standards of intra-group billing as defined by the OECD, ” he also said.


Read more:








Top Stories

UK helps employers with slow phase-in of job shield costs

British finance minister Rishi Sunak offered fresh help to employers hit by the coronavirus shutdown on Friday, announcing that future contributions they must make...

One new Covid-19 case from repatriations

There was one new Covid-19 case in Cyprus, the Health Ministry said on Friday, from a total of 2363 tests, bringing the total number...

Limassol: Dead body found in warehouse

  A body has been found in the light shaft of a warehouse on Nicos Georgiou street in Limassol, philenews reports. It said the body of...

Holy Synod to allow weddings during pre-Christmas fasting period

As a result of Covid-prompted wedding postponements, the Holy Synod has decided to allow wedding ceremonies during the pre-Christmas fasting period this year until...

President to discuss phase 3 with scientific advisors on Tuesday

  The team of scientists advising the government on the coronavirus outbreak are due to hold a new meeting with President Nicos Anastasiades on Tuesday...


Local cuisine: An introduction

Rich in fresh ingredients and tasty herbs, offers the very best of Mediterranean culinary delights. Head out to a tavern and feast on a...

Spiced lamb with beetroot salad and scented yoghurt

Lay the lamb on a tray, skin side down. Rub with crushed garlic, sprinkle with spices and ground pistachios, wrap in plastic wrap and...

Easy seafood pasta with white wine sauce

Ingredients: 2-3 tbsp olive oil 1 garlic clove, chopped 2-3 tablespoons of whipped cream 1/3 cup white wine 300g spaghetti, roughly broken 300-400g of...

Traditional salads that will blow your mind away

This traditional salads will make you actually love salads! Cyprus may be famous for souvla and kleftiko but if you try the traditional salads with...