New Transfer Pricing Rules In Cyprus

The Transfer Pricing rule is the method whereby tax law allocates income to related companies and permanent establishments.

The OECD Transfer Pricing Guidelines provide guidance on the application of the ‘'arm's length principle'', which is the international consensus on the valuation of cross-border transactions between associated enterprises.

In a global economy where multinational enterprises (MNEs) play a prominent role, governments need to ensure that the taxable profits of MNEs are not artificially shifted out of their jurisdiction and that the tax base reported by MNEs in their country reflects the economic activity undertaken therein.

As an internationally recognized business centre, even though it is not a member of OECD, Cyprus is a jurisdiction largely compliant with Organization for Economic Co-operation and Development (OECD) standards.