Signing of Multilateral Competent Authority Agreement on the exchange of Country by Country Reports

The Republic of Cyprus has signed on November 1st, 2016 the Multilateral Competent Authority Agreement on the exchange of Country by Country Reports. The Country by Country Reporting is part of the Actions released by the Organisation for Economic Co-operation and Development (OECD) regarding the Base Erosion and Profit Shifting project and in particular concerns Action 13 which provides for the transfer pricing Documentation and Country by Country Reporting.

According to the said Action, the Tax Authorities have the obligation to develop rules regarding transfer pricing documentation of Multinational Enterprises with consolidated group revenue of more than Euros 750 million per fiscal year. The rules to be developed should provide for the Reporting Entities to submit to the Tax Authorities the necessary information regarding the global allocation of the group’s income, business activities and taxes paid/accrued, in order to conduct transfer pricing risk assessments and examinations, which is an essential tool for tackling base erosion and profit shifting problem.

The information to be exchanged under Country by Country Reporting will be submitted based on a template the OECD has developed. It requires Multinational Enterprises to report annually on an automatic basis and for each tax jurisdiction in which they do business, the amount of revenue, profit before tax, tax paid and accrued, total employment, capital, retained earnings and tangible assets.

The Ministry of Finance has already initiated the development of the appropriate legal and regulatory framework, through the development of a Decree, by virtue of Article 6 (16) of Assessment and Collection of Taxes Law. The Decree will determine, inter alia, the obligations of the Reporting Entities in relation to the submission of Country by Country Reporting to the Tax Authorities.

Source: Press and Information Office.