By March 2025, the finalization of Cyprus’ new Tax Framework will reveal whether the President's pre-election promise to raise the tax-free income threshold from €19,500 to €24,500 will be realized.

In his latest multi-channel interview, the President responded to inquiries about this topic, stating that this pledge now falls under the broader study for tax reform and fiscal transformation.

As previously reported by Brief, the task of this tax transformation has been assigned to the University of Cyprus’ Econonics Research Center. They are currently processing the President’s recommendation to increase the tax-free income limit from the current €19,500 to €24,500.

Confirming this information to Brief, George Syrichas, an economist at the Centre and a member of the advisory committee, added that several proposals from various bodies are being considered as part of the tax reform study.

Economic circles also mentioned to Brief that it’s currently impossible to predict whether the tax-free threshold will be increased. They emphasized that the study and changes involve the entire framework, and all proposals must be evaluated within the context of the broader tax reform. What will eventually be implemented, as they informed us, will become clear in March 2025, in line with the schedules for finalizing the new tax framework.

The first reform to be completed concerns green taxation, which will be implemented by the summer of 2024 and is currently under consultation, introducing the first taxes.

Specifically, the green taxation in 2024 will impose a 5-cent tax per liter on fuel, a 7-cent carbon tax per liter for industries, a 1-cent tax per cubic meter on water, and a €2.5 fee per night in hotels and tourist accommodations.

These green fees are under consultation to finalize compensatory measures for households and businesses, and will then be submitted to the Ministry for approval and to Parliament for voting.

The average annual cost per citizen for these green taxes is estimated to be €121.

The project will be completed in 24 months. The study, which started in September 2023, will conclude around the end of August 2025, through 15 phases. The Centre for Economic Research will provide interim impacts and evaluations before the final report. This marks the first major tax reform in Cyprus since 2002, highlighting the project's challenges. Additionally, the project’s advisory committee will organize bilateral meetings with bodies/organizations to exchange views.

The advisory committee for the project, essentially responsible for recommending changes for the tax transformation, consists of 12 members:

• George Pantelis – General Director of the Ministry of Finance

• Soteris Markides – Commissioner of Taxation

• Naya Symeonidou – Senior VAT Officer

• Klelia Papadopoulou – Chief Tax Officer

• Elena Andreou – Director of the Centre for Economic Research, Professor of Economics at the University of Cyprus

• George Syrichas – Economist

• Fanis Mamuneas – Professor, Department of Economics, University of Cyprus

• Panagiota Lysiotou – Associate Professor, Department of Economics, University of Cyprus

• Marios Andreou – Tax Expert

• Kostas Markides – Tax Expert

• Rena Makri – Control Officer, Coordinator of the Advisory Committee

• Maria Grigoriou – Legal and Tax Advisor