The Cyprus Ministry of Finance, in a release, announced that Cyprus has agreed to all safe harbours and administrative guidance provided by the BEPS Inclusive Framework concerning the Pillar Two Global Minimum Tax (GloBE rules).
The release highlighted that Cyprus is not a member of the Organisation for Economic Co-operation and Development (OECD) due to political objections and, therefore, is unable to participate in the relevant consultations held at the level of the OECD Comprehensive Framework.
Despite this, Cyprus has supported the actions of the OECD and the G20 on Base Erosion and Profit Shifting (BEPS) and the work undertaken to date by the Comprehensive Framework for BEPS actions in the field of international taxation.
It should be noted that the rules outlined in the OECD/G20 declaration on BEPS actions, dated 21 October 2021, serve as the foundation for the development of Pillar One and Pillar Two. The Ministry of Finance has accepted these guidelines, as confirmed in an announcement released at the beginning of October 2021.
Cyprus endorses the Pillar Two framework under Article 32 of Council Directive (EU) 2022/2523 of 14 December, 2022. It also provides complete assurance and consent to the Safe Harbour rules outlined in the OECD Pillar Two guidance released in December 2022, July 2023, December 2023, and June 2024.
It should be noted that Cyprus has not fulfilled its obligations to implement the Pillar Two global minimum tax as mandated by Council Directive (EU) 2022/2523.
As per the Article 32 of the Pillar Two Directive, Cyprus approved the following documents:
- OECD (2022), Safe Harbors and Penalty Relief: Global Anti-Base Erosion Rules (Pillar Two), OECD/G20 Inclusive Framework on BEPS, OECD, Paris, published by OECD on 20 December, 2022;
- OECD (2023), Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti-Base Erosion Model Rules (Pillar Two), July 2023, OECD/G20 Inclusive Framework on BEPS, OECD, Paris, published by the OECD on 17 July, 2023;
- OECD (2023), Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti-Base Erosion Model Rules (Pillar Two), December 2023, OECD/G20 Inclusive Framework on BEPS, OECD, Paris, published by the OECD on 18 December, 2023;
- OECD (2024) Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti-Base Erosion Model Rules (Pillar Two), June 2024, OECD/G20 Inclusive Framework on BEPS, OECD, Paris published by OECD on 17 June, 2024.
