After over 20 years, Cyprus has initiated substantial discussions on modernizing its tax model, which has remained unchanged since 2001. Today (29/9), a pivotal meeting is set to take place at the Ministry of Finance, focusing on a comprehensive tax transformation.

Representatives from various professional associations will attend the meeting. The Economic Research Centre will present details about a study commissioned by the University of Cyprus, at the behest of the Minister of Finance. This study will underpin the Ministry of Finance's tax reform proposals.

According to Brief, the research is expected to last two years. However, the Ministry of Finance is anticipated to implement parts of the tax reform earlier. Several pressing issues have emerged, drawing attention from various stakeholders. Key among them are calls for accelerating changes such as the reduction or elimination of the corporate fee of €350 and the swift transition to a green economy, accompanied by obligations arising from green tax reforms.

Nikos Christodoulides had previously expressed his commitment to tax reform, as he pledged a complete tax overhaul with input from independent experts. Simplifying and eliminating unnecessary taxes, improving processes for prompt tax refunds and offsetting, have been among his pre election promises. Additionally, both during his campaign and after his election, the President expressed his intention to raise the tax-free income threshold from €19,500 to €24,500.

Concerning his commitments, President Christodoulides has thus far realized the first phase by commissioning the University of Cyprus, which collaborates with independent experts, for the tax reform study. It remains to be seen how, over the next two years – when the tax reform is planned to be implemented – the President will fulfill his remaining promises.

As previously reported by Brief, the University of Cyprus will be conducting a study centered around the following key topics:

1. Income Tax Reduction: The study will delve into the possibility of reducing income taxes for workers.

2. Circular Economy Promotion: With an emphasis on the introduction of tax incentives for businesses that are focused on waste reduction, the circular economy's promotion will be looked into.

3. Compensatory Measures: The study aims to assess measures that will benefit vulnerable groups through grants and sponsorships.

1. Enhancing the competitiveness of Cyprus' tax model.

2. Reducing the administrative burden on taxable citizens.

3. Achieving a fairer distribution of the tax burden, while maintaining fiscal neutrality.

1. Raising the tax-exempt amount.

2. Increasing the corporate tax rate.

3. Reducing or abolishing the special contribution on the declared or actual dividend distribution.

4. Lowering the amount of the numerical contribution on credit interest.

5. Cutting or eliminating the company fee of €350.

6. Additionally, considerations are being made regarding the imposition of environmental fees and the adjustment of VAT rates for products and services related to public health.