By Stelios Orphanides
The finance ministry said it is drafting a decree which will implement its obligations stemming from signing the country-by-country reporting agreement, an international initiative aiming at clamping down on tax-base erosion and profit-shifting.
“The tax authorities have the obligation to develop rules regarding transfer pricing documentation of multinational enterprises with consolidated group revenue of more than €750m per fiscal year,” the ministry said in a statement on its website on Monday. “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 (or) accrued, in order to conduct transfer pricing risk assessments and examinations, which is an essential tool for tackling the tax-base erosion and profit-shifting problems”.
The information to be exchanged under the provisions of the country-by-country reporting, based on the multilateral competent authority agreement, which Cyprus signed on November 1, and part of an action plan of the Organisation for Economic Cooperation and Development, “will be submitted based on a template the OECD has developed,” the ministry said. “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 finance ministry added that the decree, which will carry the signature of finance minister Harris Georgiades, will determine, inter alia, the obligations of reporting entities in relation to the submission of country-by-country reporting to tax authorities.