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Intra-Group Financing Arrangements (March 2017)

The Department of Tax has informed the Institute of Certified Public Accountants of Cyprus (ICPAC) that from 1st July 2017 the pre-agreed minimum profit margins of 0.125% – 0.35% on intra-group back to back financing arrangements will no longer apply.

As a result, all tax rulings issued concerning this matter will cease to be effective from that date onwards and acceptable taxable profit margins on intra-group back to back financing arrangements will be determined by Transfer Pricing rules.

The new approach is in line with the recent developments in the EU Code of Conduct for business taxation and the relevant OECD/G20 BEPS initiative.

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