CIBA Seeks Clarity on Cyprus Tax Reform
The Cyprus International Businesses Association (CIBA) is raising alarms about the newly proposed tax reforms in Cyprus. In a proactive move, CIBA has requested a meeting with Finance Minister Makis Keravnos to address concerns that these reforms could negatively impact foreign investments and businesses operating in Cyprus.
Background on the Proposed Tax Reforms
On February 26, 2025, the Tax Reform Team of Cyprus unveiled a series of tax proposals aimed at modernizing and enhancing the competitive edge of the island’s tax framework. Currently, these proposals are open for public consultation before they storm the parliamentary floor for approval. Here’s what’s on the table:
- Corporate Income Tax Rate: A proposed increase from 12.5% to 15%.
- Changes in Personal Income Tax Rates: New adjustments to tax brackets with updated rates:
- Income up to €20,500: 0%
- €20,501 to €30,000: 20%
- €30,001 to €40,000: 25%
- €40,001 to €80,000: 30%
- Above €80,000: 35%
- Elimination of Insurance Premium Tax: The current 1.5% insurance premium tax will be nixed.
- Tax Loss Carryforwards: Tax losses can be carried forward for a decade, a significant shift from the existing five-year limit.
These changes are set to be rolled out gradually, with some measures kicking in as soon as the 2025 tax year and continuing into 2026.
CIBA’s Position on the Reforms
CIBA has consistently prioritized the enhancement of Cyprus’s tax framework to elevate economic competitiveness. Recently, CIBA representative Andreas Pishias articulated the necessity for aligning any tax reforms with European Union regulations and global economic trends. This alignment is vital for businesses maneuvering through the intricate dynamics of international markets.
In a letter dispatched to various government officials, including the Finance Minister and the House Finance Committee, CIBA clearly stated its worries. Any adjustments to tax policy must take into account their potential effects on foreign investment and international business relations. Moreover, quick legislative processes are crucial to minimize uncertainty for businesses that depend on a stable tax environment.
Significance of the Proposed Meeting
The meeting with Finance Minister Keravnos is pivotal for clarifying the anticipated impacts of the proposed tax reforms on the business landscape, particularly concerning international trade and investment. By opening a dialogue with policymakers, CIBA aims to advocate for a tax framework that keeps Cyprus an attractive destination for investment, especially in light of intensifying competition from other EU nations.
Future Outlook
The current economic landscape of Cyprus possesses a projected GDP growth rate of 3.2% for 2025, a minor dip from 3.4% in 2024, yet it reflects a resilient economic stance amid global uncertainties. The effectiveness of the tax reform will be a determining factor in shaping the future business climate and investor confidence in Cyprus.
As the legislative process progresses, the involvement of stakeholders, including organizations like CIBA, will play an essential role in navigating towards a balanced approach that promotes growth while adhering to international standards.
For comprehensive insights on the tax reform and its implications, visit these links:
– Cyprus Tax Reform Measures
– Support Package Presentation
– Invest Cyprus Support for Tax Reform
– PwC Update on Tax Reform
