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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Cyprus Phase 2 Peer Review

This report for Cyprus has been published on 22 Nov 2013. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  Companies and partnerships are required to keep a register of members or partners, and companies and certain partnerships must submit up-to-date ownership information in an annual return to the Registrar. In the period 2008-2012, on average only 23% of the companies filed an annual return, and no monitoring and enforcement of this obligation has been carried out. Moreover, the compliance rates of the obligations to register for tax purposes and to submit tax returns are low. Non-compliance with these obligations may have resulted in Cyprus not exchanging up-to-date information, in particular because the Companies Register is the primary source used by the Cypriot authorities for obtaining ownership information on companies and partnerships.  Cyprus should ensure that its monitoring and enforcement powers are sufficiently exercised in practice to support the legal requirements which ensure the availability of ownership information on companies and partnerships. 
A clear obligation on trustees to have information available on the other trustees, settlors and beneficiaries of the trust(s) with respect to which they act as a trustee, is only in force since 1 January 2013.  Cyprus should monitor the practical implementation of the recently introduced requirement on trustees to keep comprehensive identity information on trusts. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Non-Compliant.  Accounting records have not been available in a number of cases, in particular where the person required to keep the accounting records did not comply with its general obligations to submit tax returns and/or annual returns to the Companies Registrar.  Cyprus should ensure that reliable accounting records, including underlying documentation, are being kept by all relevant entities and arrangements for a period of at least five years. 
Comprehensive accounting record keeping obligations on certain trusts as well as on companies incorporated in Cyprus but managed and controlled in another jurisdiction have only been introduced recently.  Cyprus should monitor the practical implementation of the recently introduced obligations to keep comprehensive accounting information by certain trusts and companies incorporated in Cyprus but managed and controlled in another jurisdiction. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Non-Compliant.  Until the end of 2011, it was the practice of the Cypriot competent authority not to approach a taxpayer for information before that taxpayer had submitted its income tax return(s) for the year(s) the information sought by the requesting jurisdiction related to, even in cases where no direct relationship between the tax return and the information sought existed. This has led to unnecessary delays in obtaining the information. Since the end of 2011, the Cypriot competent authority will try to obtain information from a taxpayer for EOI purposes where this information does not depend on the submission of an income tax return regardless of whether the income tax return has been filed.  Cyprus should monitor the practical implementation of its recently revised policy in respect of obtaining information from Cypriot taxpayers. 
The Cypriot competent authority did not use its specific information gathering powers to obtain information from ‘third parties’ other than banks, i.e. service providers such as lawyers, which may have had the information requested. In addition, these specific information gathering powers, which include the written consent of the Attorney-General, have been used to obtain information from a bank directly in only a limited number of cases. This may have contributed to delays in responding to EOI requests.  Cyprus should use its information gathering powers to obtain information from all potential information holders, including directly from banks and other third parties, where appropriate. 
The relatively high level of non-compliance by Cypriot taxpayers in responding to letters to provide information has not effectively been dealt with in terms of an effective use of the available compulsory powers. This may have specifically impacted the obtaining of bank information from Cypriot taxpayers.  Cyprus should exercise its compulsory powers more effectively in exchange of information cases where information is not produced, in particular in respect of bank information. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Some delays have been experienced in Cyprus responding to requests from other jurisdictions to start negotiations with a view to enter into an information exchange agreement.  Cyprus should, expeditiously, enter into agreements for exchange of information (regardless of their form) with all relevant partners, meaning those partners who are interested in entering into an information exchange arrangement with it. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  During the three-year review period, Cyprus has been able to send final responses within 90 days in less than 10% of the cases, and almost 80% of the cases have been responded to after 180 days or are still outstanding. According to the Cypriot authorities, of the 929 requests received, 15% have not received a response at all during the three-year review period, while another 25% have received a partial response.  Cyprus should ensure that it responds to EOI requests in a complete and timely manner. 
During the three-year review period, Cyprus did not always provide a status update to its EOI partners within 90 days.  Cyprus should provide status updates to its EOI partners within 90 days where relevant. 
Although new staff has recently been hired, there was not sufficient staff to handle all incoming EOI requests in a timely manner during the three-year review period.  Cyprus should monitor that the resources allocated to its competent authority are sufficient to deal with all incoming EOI requests.