Cyprus Introduces New Guidelines On Switch Pricing – Switch Pricing

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In practice, Transfer Pricing is the Tax Law application of the

arm’s length principle, applied for determining a reliable and

fair allocation and taxation of profits within multinational

enterprises.

Transfer Pricing and the application of the arm’s length

principle are in place to combat the base erosion and profits

shifting (BEPS) from MNEs. BEPS refers mainly to the aggressive tax

planning strategies used by MNEs to transfer their profits from one

country to another to benefit from lower or no taxation or more

favourable tax regimes.

The Cyprus House of Representatives voted for the new Transfer

Pricing requirements on the 30th of June.

The new rules for Transfer Pricing were transposed into the

Income Tax Law and the Collection and Assessment of Taxes Law.

The Transfer Pricing new rules align with the requirements set

out in the Action 13 of the BEPS Action Plan recommended by the

Organisation for Economic Cooperation and Development (OECD).

In addition, the new rules provide for Transfer Pricing

documentation requirements, subject to income-based thresholds.

Correspondingly, it is noteworthy to mention that the new rules

provide for a procedure for the taxpayers to apply for Advance

Pricing Arrangements so for them to eliminate uncertainty over the

taxation of their incomes and enhance the predictability of the tax

treatment.

The publication “Introduction to Transfer Pricing

rules” briefly describes the new rules, as these were

published in the Official Gazette of the Republic. The

“Introduction to Transfer Pricing rules” publication

serves as a reference tool for entrepreneurs who wish to enrich

their knowledge of Cyprus Transfer Pricing rules and cannot

substitute any specialised professional advice.

If you wish to discuss your Transfer Pricing questions, please

get in touch with our tax professionals, who are committed to

helping you by providing tax services as per your needs.

You can get in contact with us via email or by arranging a

personal meeting at one of our Cyprus office locations.

To be constantly updated with business insights and news that

may affect your personal affairs or your company’s operations,

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INTRODUCTION TO TRANSFER PRICING RULES

The content of this article is intended to provide a general

guide to the subject matter. Specialist advice should be sought

about your specific circumstances.