On 30 December 2016, the Cyprus Ministry of Finance has issued a Decree to align the Assessment and Collection of Taxes Law with the requirements of the Council Directive (EU) 2016/881 adopting the recommendations of the OECD BEPS Action Plan 13 on Country-by-Country Reporting (CbCR).
Based on the provisions of the Decree, as from 1 January 2016 a Cyprus tax resident company being the ultimate parent company of a Multinational Enterprise Group (MNE Group) is required to submit a CbC report in its country of residency if the annual consolidated revenue of the MNE Group is equal or exceeds the €750 million threshold set.
Furthermore, a Cyprus tax resident company which may not be the ultimate parent company of the MNE Group may be considered to be the surrogate parent company for CbCR purposes if any of the following conditions is satisfied:
1. The ultimate parent company is not resident in Cyprus; or
2. The untimate parent company is not obliged to file a CbC Report in its country of residency; or
3. The country of tax residency of the ultimate parent company does not have an effective automatic exchange of information instrument with Cyprus in relation to CbC Reports; or
4. The country of tax residency of the ultimate parent company has been reported for systematic failure on exchanging information.
A surrogate parent company has the responsibility to submit the CbC Report of the MNE Group in place of its ultimate parent company.
Further, any constituent company of an MNE Group that is a tax resident of Cyprus, shall notify the Cyprus Tax Authorities whether it is the ultimate parent company or the surrogate parent company, no later than the last day of the reporting fiscal year of such MNE Group. The first notification has been extended and will take place on the 20th October 2017.
The Cyprus ultimate or surrogate parent company of an MNE Group will have to proceed with an electronic submission of the relevant CbC Report to the Cyprus Tax Authorities within a period of 15 months as from the end of the reporting fiscal year. As regards to the submission of the first CbC Report which relates to fiscal years beginning between the period from 1st January to 31st December 2016, the due date for submission is extended by 3 months.
The CbC Report must include the following:
(i). Aggregate information relating to the amount of revenue, profit/(loss) before income tax, the amount of income tax paid, the amount of income tax accrued, the issued share capital, accumulated retained earnings, the number of employees and tangible assets (other than cash or cash equivalents) with regard to each jurisdiction in which the MNE Group operates; and
(ii). Identification of each constituent company of the MNE Group setting out the country of tax residence and the nature of its main business activities.
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