Better late than “Never”: Upcoming Tax Reforms in Cyprus

The Cyprus government plans to proceed with tax reform the upcoming year 2022, after 20 years of a long-established tax policy.

The reforms will include inter alia:

• raising the corporation rate from 12,5% to 15%;
• reduction or abolition of dividend contribution;
• reduction or abolition of the annual levy;
• reduction of the rate of defense contribution on credit interest;
• introducing carbon tax and fossil fuels taxes to achieve the country’s environmental objectives.

As per the Finance Minister Mr. Constantinos Petrides, the reforms will introduce the carbon tax with the gradual rise of taxes on fossil fuels as well as introduction of environmental taxes that will serve to achieve environmental objectives. There will also be an a alteration of VAT rates based on a recent EU decision about products and services relating to public health and digital transition.

The goal as, he said, is to strengthen the competitiveness of the Cypriot economy, reduce tax inequality, to ensure that our tax system will be more simplified and to reduce the administrative burden.

Our office will keep you informed as to when the above intended changes will be implemented.