In a dynamic economic landscape, Cyprus has embraced a transformative shift with the introduction of new transfer pricing legislation. Crafted to align with global standards set by the OECD, these regulations present a pivotal opportunity for businesses to not only ensure compliance but also drive sustainable growth.
Compliance Imperative: Master File and Local File
As the clock ticks, Cypriot enterprises face critical deadlines for compliance. Multinational groups with consolidated revenue exceeding Euro 750 million must meticulously prepare a Master File, providing high-level insights into global operations. This document, due alongside the Income Tax Return, must be readily available to tax authorities within 60 days upon request.
For intragroup transactions surpassing Euro 1.000.000 per category concerning trade of goods, or services, or IP, etc., or 5.000.000 Euros considering financial transactions* a detailed Local File must be prepared, capturing essential information about the taxpayer’s business. Even transactions falling below this threshold require a simplified documentation file, emphasizing the urgency for preparation.
Quality Assurance Review ensures accuracy and completeness, safeguarding against penalties for non-compliance. The consequences of missing deadlines can be severe, with penalties ranging from €5,000 to €20,000, underlining the importance of timely action to avoid audits or investigations.
*The thresholds have been increased according to the Tax Letter by the Commissioner of Taxation on 1st February 2024. The Letter was delivered to Institute of Certified Public Accountants of Cyprus, the Cyprus Chamber of Commerce and Industry and the Cyprus Employers and Industrialists Federation informing them that the thresholds for Local File requirements have been increased for FY2022.
Strategic Advantages: Advance Pricing Agreements and CbCR
Amidst these regulatory challenges, there lies an opportunity to proactively shape transfer pricing strategies. The introduction of Advance Pricing Agreements empowers taxpayers to establish pre-determined arrangements, providing certainty and stability in controlled transactions.
Meanwhile, Country-by-Country Reporting (CbCR) regulations demand meticulous preparation and adherence to OECD guidelines. With deadlines looming, companies must ensure accurate disclosure of income, taxes paid, and other indicators, reflecting their operations across jurisdictions.
Charting the Course: Reach Out to Us
In this countdown to compliance, navigating Cyprus’ new transfer pricing regulations demands expertise and strategic foresight. Our seasoned team stands ready to guide you through every step, transforming regulatory challenges into strategic advantages. Embrace the future today. Reach out to us and embark on a journey towards sustainable growth and compliance in an evolving business landscape.
Contact us at tp@privelpartners.gr
