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The Republic of Cyprus, although not a member of the Organisation for Economic Co-operation and Development (OECD) due to political objections, is not in a position to participate in the relevant consultations that take place at the level of the OECD's Inclusive Framework, has supported the Organisation's and the G20's actions on Tax Base Erosion and Profit Shifting (BEPS) and the work undertaken to date by the Comprehensive Framework for BEPS actions in the area of international taxation.
In particular, the rules set out in the OECD/G20 Statement on BEPS Actions dated 21 October 2021, which provides the basis for the development of Pillar 1 and Pillar 2, were welcomed by the Treasury in a statement issued by the Minister of Finance in early October 2021.
Article 32 of the Council of the European Union (EU) Directive (2022/2523) of 14 December 2022 on "ensuring a worldwide minimum level of taxation of multinational enterprise groups and large domestic groups in the Union", also known as "Pillar 2", provides that all EU Member States must have given their consent in order for an international set of rules and conditions to constitute an "appropriate international agreement on safe harbours".
In view of Article 32 of the Pillar 2 Directive, the Republic of Cyprus provides its full assurance and consent to the safe harbour rules as provided in the following documents.
(a) OECD (2022), Safe Harbours and Penalty Relief: Global Anti-Base Erosion Rules (Pillar Two), OECD/G20 Inclusive Framework on BEPS, OECD, Paris, published by the OECD on 20 December 2022,
(b) 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 OECD on 17 July 2023,
[C](c) 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 OECD on 18 December 2023,
(d) 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 the OECD on 17 June 2024.
This statement supplements the relevant statements of 22 March 2023 and 23 October 2023.
(AF/MS)
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