Cyprus: Cyprus’ commitment to the MCAA on CbCR
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Cyprus: Cyprus’ commitment to the MCAA on CbCR


Alena Malaya

Development and global implementation of the OECD's BEPS Action Plan successfully continued in 2016. The country-by-country reporting (CbCR) initiative under Action 13 of the BEPS initiative has been no exception. As of December 7 2016, 50 jurisdictions had signed the Multilateral Competent Authority Agreement (MCAA) on the automatic exchange of CbC reports.

What does CbCR and the automatic exchange of CbC reports entail?

The ultimate parent entity of any large multinational enterprise (with annual consolidated group revenue in the immediately preceding fiscal year equal to or exceeding €750 million ($799 million), or a near equivalent amount in domestic currency), will have to prepare and file a CbC report in the jurisdiction of its tax residence. The first report will focus on the MNE group's fiscal year beginning on or after January 1 2016. Then, once the government-to-government mechanism to exchange CbC reports is implemented, the reports will be exchanged on an automatic basis with the competent authorities of the jurisdictions in which the MNE group operates.

What information will be exchanged?

Information on the amount of revenue, the amount of profit before tax, the amount of tax paid and accrued will have to be reported by the MNE. The CbC report also requires MNEs to state their total number of employees, stated capital, retained earnings and tangible assets in each jurisdiction.

There are some existing legal mechanisms that can be used for the purpose of automatic information exchange. One of which is the MCAA on the exchange of CbC reports (CbC MCAA), which has been developed based on Article 6 of the Convention on Mutual Administrative Assistance in Tax Matters (Convention).

Cyprus participates in this Convention and has opted for the rules and procedures foreseen by the CbC MCAA by signing the CbC MCAA on November 1 2016.

The Ministry of Finance of Cyprus has already begun developing the appropriate local legal and regulatory framework through the development of a special Decree. The Decree will determine, inter alia, the obligations of the reporting entities in relation to the submission of CbC reports to the tax authorities.

We assume that a new legislation will be presented soon, since the European Union Commission in 2016 presented its anti-tax avoidance package, which included CbCR, with a recommended deadline for its implementation set at December 31 2017.

Coming back to the CbC MCAA, it is worth mentioning that according to section 8 of the CbC MCAA, Cyprus is obliged to provide to the coordinating body secretariat (OECD Secretariat that provides support to the coordinating body) a written notification containing, among other things, a list of jurisdictions with respect to which Cyprus intends to have the CbC MCAA in effect and exchange CbC reports with, or a declaration that it intends to have this agreement in effect with all other competent authorities that provide a similar notification. Also, Cyprus has to indicate whether it prefers to be included in the list of non-reciprocal jurisdictions that will send, but will not receive, CbC reports.

Additionally, for an actual exchange to take place, both participating jurisdictions have to harmonise their legislation with CbCR requirements and ensure that the required confidentiality and data safeguard standards are in place.

In summary, it is worth reiterating that the exchange will not start with the jurisdictions that are not party to the CbC MCAA. For instance, if one entity from the group of the MNE is a tax resident of the Russian Federation, a CbC report will not be sent to the Russian tax authorities until the Russian Federation joins the agreement.

Alena Malaya (

Eurofast Taxand Cyprus

Tel: +357 22 699 140


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