It is probable that, while you are reading this article, Cyprus is already the latest European country to introduce transfer pricing legislation in its income tax law with effect from the 1st of January 2021.
This introduction will mark a new era of how Cypriot corporations shall calculate their tax base: transfer pricing, in essence, is a mechanism that divides the overall business profit of a group amongst the various companies.
To date, Cyprus has had no detailed transfer pricing legislation included in its income tax law. The tax law was first introduced in 1941 by the British Colonial Governor in Cyprus (Sir William Denis Battershill) and made no reference to any transfer pricing provisions. It was not up until 2002, when the legislation was amended and a specific “arm’s length” provision was incorporated therein, despite there being no guidance on how to apply it. Further on, in 2017, a detailed transfer pricing circular (based on the OECD transfer pricing guidelines) was issued by the tax authorities governing (only) certain financing transactions.
Recent Comments