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
