Publication Of Inland Revenue Department Guidance On Interest Rate Margins On Loans Between Connected Entities

Section 33 of the Cyprus Income Tax Law allows the tax authorities to adjust a company's taxable profit in the event that transactions between related companies are undertaken other than on an arm's length basis.

In 2009 the tax authorities gave informal guidance on the parameters to be observed in arriving at the acceptable margin of taxable interest which should apply in transactions involving Cyprus entities as intermediary financing vehicles in back-to-back financing arrangements. This guidance has...