On 5 October 2023, the Cyprus Tax Department issued a notice regarding the anticipated implementation date of the agreement for the exchange of Country-by-Country (CbC) reports with the United States alongside the local filing obligations.

The Department informed all legal entities and their representatives that the bilateral Competent Authority Arrangement (CAA) for the exchange of Countryby-Country (CbC Reports) between Cyprus and the United States of America, which is currently under negotiation, is expected to be effective for Reporting Fiscal Years starting on or after 1 January 2023. Consequently, in the case where the Ultimate Parent Entity of a Multinational Group of Enterprises (MNE) is tax resident in the United States of America, the secondary filing mechanism should be triggered for Reporting Fiscal Years starting on or after 1 January 2022 and before 1 January 2023.

For example, a local filing obligation should still arise in Cyprus in respect of an MNE Group’s CbC report for Reporting Fiscal Year ending on 31 December 2022, even if a CbC Report has or will be submitted in the United States of America. Additionally, in the cases where notifications for reporting fiscal years starting on or after 1 January 2022 and before 1 January 2023 have been filed in Cyprus by Cypriot Constituent Entities of MNE Groups which are affected by this announcement, such notifications must be revised (if required) in accordance with this announcement. If such notifications are revised by 31 December 2023, no penalties will be imposed for the Reporting Fiscal Year starting on or after 1 January 2022 and before 1 January 2023.

Earlier on 13 October 2022, the Cyprus Tax Department notified all legal entities and their representatives about the ongoing negotiations for a bilateral Competent Authority Arrangement (CAA) between Cyprus and the United States of America to facilitate the exchange of Country-by-Country (CbC) Reports.