CYPRUS Trends and Developments Contributed by: Marios Palesis and Theodora Charalambous, Kinanis LLC
• a group organisational structure; • a description of the MNE’s business activities including the drivers of business profit; • the transfer pricing policies of the group; and • the geographic markets for the group’s products and services. The group’s intangibles must also be listed, together with the MNE’s intercompany financial activities and tax positions. Implications for Taxpayers Cyprus taxpayers engaging in transactions with a related party must consider the impact of the new rules and the thresholds, and accordingly undertake the relevant analysis, perform benchmarking and establish the arm’s length pricing of the controlled transaction. The final step for a taxpayer is to prepare the required transfer pricing documentation, putting them one step closer to full Cyprus tax compliance.
Although the 2026 tax reform introduced wide-ranging amendments to the Cyprus tax system, the transfer pricing framework itself remains largely unchanged. The core principles of Article 33 continue to apply without fundamental modification. The main developments concern targeted refine - ments, including the expanded definition of con - nected persons, the upward revision of the Local File thresholds, and the reduced tax return filing deadline. Accordingly, Cyprus taxpayers engaging in related party transactions should review their existing trans - fer pricing arrangements primarily from a compliance and procedural perspective, ensuring that documen - tation thresholds, timing requirements and reporting obligations are correctly applied under the revised framework.
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