Country by Country Reporting (CbC)
The Ministry of Finance in late December 2016 issued a decree to align provisions of Cypriot tax law with the requirements of EU Council Directive (EU) 2016/881 adopting the recommendations of the OECD base erosion and profit shifting (BEPS) Action Plan 13 on country-by-country (CbC) reporting.
Cyprus CbCR requirements took effect on 1 January 2016. The Cyprus CbCR requirements require certain Cyprus parented groups, and in specific instances, domestic subsidiaries of foreign parented groups, to report data on revenues, profits, taxes paid/accrued, capital, accumulated earnings and employee numbers, along with other data on a CbC basis for the group to the Cyprus Tax Department (the Tax Department).
The Decree also includes an obligation for Cypriot constituent entities to make an annual notification confirming the identity and jurisdiction of tax residence of the CbC reporting entity.
The deadline for the notification for the year 2016 has been extended to 20 October 2017 and requires Cypriot companies to notify the Tax Department electronically to confirm the name, identity and tax residence of the CbC reporting entity.
Reporting entity of MNE Group
The CbC report must be prepared and submitted to the Tax Department for the year starting on 1 January 2016, if the annual consolidated group revenue exceeds €750 million by:
- Ultimate Parent Entity (UPE) of an MNE Group which is tax resident in Cyprus.
- Surrogate Parent Entity (SPE) of an MNE Group which is tax resident in Cyprus and has been appointed by the MNE Group as the reporting entity for CbCR.
The deadline to file the CbC report with the Tax Department is 12 months from the end of the relevant accounting period (e.g., for groups with year-end 31 December 2016, the reporting deadline is by 31 December 2017).
Maintenance of books and records
The Decree provides that the Tax Department may request books and records from the Reporting Entity explaining and supporting the information disclosed in the CbC report, no matter if the records are kept in Cyprus or outside Cyprus. The Reporting Entity is required to maintain the books and records for a period of six years.
The submission of both the notification and the CbC report shall be completed annually in the English language and submitted electronically via Ariadne. Detailed guidance regarding the electronic submission of the notification and of the CbC report is expected to be issued shortly by the Tax Department.
Penalties will introduce in Cyprus Companies with respect to non-compliance with CbCR.