On 28 March 2024, the Cyprus Tax Department released the updated version of its English-language Frequently Asked Questions (FAQs) on transfer pricing. The FAQs present the questions and the corresponding answers as published on the Tax Department’s website.

The update includes these new questions:

  1. Should the sale of shares or other securities between related persons that fall under the definition of “titles” as per article 2 of the ITL and Circular 2008/13 be reported in the SIT and be taken into account for the purposes of assessing whether the applicable Local File threshold is exceeded?
  2. Should balances of a trading nature (i.e. Trade Receivables and Trade Payables) between related persons be reported in the SIT and be taken into account for the purposes of assessing whether the applicable Local File threshold is exceeded?
  3. Do Trade Receivable balances or Other Receivable balances (for example long outstanding balances) between related persons that are considered to be balances of a financing nature (i.e. not of trading nature) have to be reported in the SIT and be taken into account for the purposes of assessing whether the applicable Local File threshold is exceeded?
  4. What amount needs to be reported in the SIT in relation to Trade Receivable or Other Receivable balances between related persons which are considered to be balances of financing nature?
  5. Qualifying Owners, Qualifying Charterers, and Qualifying Ship Managers as per sections 6, 18, and 28 of the Merchant Shipping (Fees and Taxing Provisions) Law 44(I)/2010, as amended, engage in Qualifying Shipping Activities which are subject to tonnage tax.
  6. Party A (Qualifying Owner, Qualifying Charterer, and Qualifying Ship Manager as per sections 6, 18, and 28 of the Merchant Shipping (Fees and Taxing Provisions) Law 44(I)/2010, as amended) engages in a Qualifying Shipping Activity which is subject to tonnage tax.
  7. Qualifying Owners, Qualifying Charterers, and Qualifying Ship Managers as per sections 6, 18, and 28 of the Merchant Shipping (Fees and Taxing Provisions) Law 44(I)/2010, as amended, earn income from a Non-Qualifying Shipping Activity which is subject to Income tax.

On 10 February 2023, the Cyprus Tax Department published a set of FAQs to clarify certain provisions of the new transfer pricing rules approved in June 2022, effective from 1 January 2022.