ARTICLE · 21 JULY 2022

Cyprus Introduces New Rules On Transfer Pricing

RSM Cyprus

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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.

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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.

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