Cyprus’ long-awaited tax reform has won backing from employers, businesses and public sector unions, following the approval of the relevant tax bills by the House of Representatives before the end of the year.

In a series of statements, the Federation of Employers & Industrialists (OEB), the Cyprus Chamber of Commerce and Industry (CCCI) and the Pancyprian Public Servants Trade Union (PASYDY) welcomed the reform as a major step towards a more modern, competitive and socially balanced tax system.

OEB expressed “deep satisfaction” with the completion and passing of the tax legislation within tight deadlines, praising both Parliament and the House Finance Committee for their fast-track work without compromising quality.

The employers’ federation also thanked the government and the Ministry of Finance for adopting a structured methodology and listening to well-documented proposals from the business community. Special reference was made to the Tax Commissioner and his team for their cooperation in shaping provisions that strengthen competitiveness, safeguard transparency and enhance tax compliance.

OEB stressed that, once the new framework is implemented in practice, it will identify and promote any gaps or weaknesses that may require further adjustments. It also underlined the need to advance pending structural reforms, including energy, water management, pensions, green and digital transition, public sector modernisation and faster justice delivery.

CCCI described the tax reform as a “landmark modernisation” that aligns Cyprus’ tax system with the realities of a contemporary economy and represents a historic opportunity to upgrade competitiveness.

The Chamber highlighted the incorporation of long-standing business proposals, creating a more functional and growth-oriented framework. Key measures include the abolition of deemed dividend distribution, the reduction of the Special Defence Contribution on dividends to 5%, and provisions enhancing legal certainty, balance and investor confidence.

CCCI also emphasised the reform’s social dimension, noting that increases to the tax-free threshold and targeted family support measures will boost household disposable income and help address low birth rates, a major national challenge.

PASYDY welcomed the reform as a decisive move towards a fairer and more effective tax system, estimating annual benefits of €500 to €2,000 for taxpayers, with meaningful relief for the middle class.

The union praised the executive for pursuing comprehensive reform and stressed that the new legislation is expected to combat tax evasion and avoidance, strengthening the state’s revenue-collection capacity.

PASYDY also noted with satisfaction that several of its proposals — including the adjustment of personal income tax brackets and expanded income criteria for tax deductions, especially for children — were adopted and incorporated into the final bills.