The six draft bills forming Cyprus’s long-awaited tax reform package are being submitted today to the Council of Ministers for approval.

According to information obtained by Brief, the Legal Service has completed its legal and technical review of all the relevant bills and forwarded them to Finance Minister Makis Keravnos last Monday.

The Minister is expected to present the bills during today’s Cabinet meeting, seeking approval before they are formally submitted to the House of Representatives, where discussions will begin in the Parliamentary Committee on Finance.

Sources also indicate that during today’s meeting, the Finance Minister may propose an extension of the 0% VAT rate on basic goods until the end of 2026 — a measure aimed at easing pressure on consumers amid ongoing cost-of-living challenges.

The legislative package includes amendments to laws governing:

• Income Tax,

• Special Defence Contribution,

• Capital Gains Tax,

• as well as laws on tax collection, assessment, and stamp duty.

It also introduces new tax incentives for businesses, aligned with the government’s intention to integrate the Cost-of-Living Allowance into the National Minimum Wage framework.

During a recent session of the Parliamentary Finance Committee, Minister Keravnos described the 2026 state budget as balanced, combining development spending with social cohesion measures.

He emphasized that the budget is in surplus, with a primary surplus estimated between 3.9% and 5% of GDP.

“These surpluses,” he said, “are essential to service the public debt, which in the 2026 budget amounts to €1.12 billion, and will remain around €1 billion annually over the next five years in order to repay the Troika loan.”

Keravnos added that maintaining a surplus is crucial for managing geopolitical, geoeconomic, and internal risks, including fiscal pressures arising from government commitments and ongoing projects with uncertain future costs.

Special emphasis, he noted, has been placed on social benefits, which are set to increase by 6.7% in the 2026 budget.

The government, he said, recognizes the longstanding needs of people with disabilities, marking the first step toward addressing them by allocating €26 million in 2026, €35 million in 2027, and €45 million in 2028.