Rules for the Local and Master Report in Cyprus

September 23, 2022

The Government of Cyprus has published, in its Official Gazette, the notification with the contents of the Local Report and the Master File, as well as a dashboard of the summarized information, following the implementation of a new transfer pricing regulation in the country on June 30 of this year.  

This pamphlet provided a summary of the main requirements to be included in the Reports (Local Report, Master File, and the Summary Information Dashboard). 

Content of the Local Report

It will apply to Cypriot tax residents and permanent establishments of non-resident entities.  

Part 1:

  • A description of the entity’s management structure, an organizational chart, a description of the persons reported to by local management, and the jurisdiction(s) in which such persons maintain their main offices.  
  • A detailed description of the local entity’s business and business strategy.  
  • Key competitors 

Part 2:

  • A description of the controlled transactions and the context in which such transactions took place, including the amounts of the transactions.  
  • An identification of the associates involved in controlled transactions and the relationship between them.  
  • Detailed comparability and functional analysis of the taxpayer and the relevant associated enterprises for each controlled transaction documented.  
  • A description of the most appropriate transfer pricing method, the reasons for its selection, and important assumptions in applying the selected method.  
  • A list and description of selected comparable uncontrolled transactions (internal or external), including a description of the comparable search methodology and the source of such information.  
  • A description of the reasons for concluding the relevant transactions was valued, according to the arm’s length principle, based on the application of the selected transfer pricing method. 

Part 3:

Annual accounts of local entities for the fiscal year in question. Reporting and allocation tables that show how the financial data used in the application of the transfer pricing method can be linked to the annual financial statements. 

Master File Content

The parent or substitute entity of the multinational group shall be applied with annual consolidated revenues of EUR 750 million. 

Section 1: Structure of the group’s organizations.

Section 2: Description of the group’s activities. 

Section 3: Intangibles of the group. 

Section 4: Financial activities, intercompany of the group. 

Section 5: Tax and financial situation of the group. 

Source: Mondaq 15/09/22