The latest tax reform proposals presented at the Presidential Palace introduce significant changes to corporate taxation, personal income tax, and business regulations. The government’s aim is to modernize the system while maintaining economic competitiveness.

1. Corporate Tax Rate Increase

The corporate tax rate will be raised from 12.5% to 15%, aligning with global tax policies and ensuring Cyprus remains in line with international standards.

2. Higher Tax-Free Income Threshold

The personal income tax-free threshold will increase to €20,500, providing relief to lower and middle-income earners.

Additional tax deductions will be introduced, taking into account family composition and household needs.

3. Dividend Tax Reform

The deemed dividend distribution tax will be abolished, simplifying the tax burden for Cypriot companies.

The defense tax on actual dividend distribution will drop from 17% to 5%, making it more attractive for businesses and investors.

4. Focus on Households and the Middle Class

The reforms reflect a human-centered approach, reducing tax pressure on working families.

New tax incentives for parents will be introduced, particularly aimed at encouraging female workforce participation.

These changes are currently under consultation and are expected to be legislated within 2025. The government’s objective is to strike a balance between economic growth, fair taxation, and long-term fiscal sustainability. For more information, please contact us on [email protected]