Today, the University of Cyprus’s Economics Research Center (CypERC) is set to present 11 out of 15 phases of the country’s tax transformation plan before the President of the Republic, in the presence of key professional associations, employer and labor organizations, and government officials.

>>This Is the Tax Reform Package: Key Measures and Changes<<

The presentation will take place at noon, with President Nikos Christodoulides delivering opening remarks. Both he and the Minister of Finance have previously outlined the core provisions of the new tax reform.

As Brief reports, while the preliminary framework is already in place, it will once again be reviewed by professional associations, as well as employer and labor organizations, for a final round of refinements before submission. Parliament will also play a significant role in the process, as the final framework will be subject to extensive discussions in the Finance Committee before being debated in the Plenary.

During a meeting on January 25 with a CypERC delegation, President Christodoulides emphasized the importance of supporting low-income households, factoring in family composition, and strengthening the middle class to restore its prominent role in society.

The presentation will also highlight offsetting measures based on econometric models, benefiting workers whose annual income currently falls below the tax-free threshold of €19,500. Additionally, comprehensive analysis will be provided on compensatory measures targeting large and small-to-medium enterprises (SMEs).

The reform framework includes a proposal to increase corporate tax to 15% for businesses with an annual turnover exceeding €750 million. This aligns with global tax harmonization efforts and is expected to impact major corporations operating in Cyprus.

The transition toward a greener and more digital economy will also be supported by tax-related incentives. CypERC members will provide insights into the expected economic impact of these measures.

A government source confirmed that the preliminary framework includes raising the tax-free income threshold, though the final figure has yet to be determined. The proposed range currently stands between €22,000 and €24,000.

The tax reform also aims to introduce a tiered approach to tax relief for individuals. Social benefits will be structured based on household composition and financial obligations, such as mortgage and student loan repayments.

Naturally, the expansion of tax-free income will necessitate adjustments to tax brackets. The key issue to be addressed during the discussion is the fiscal impact of various tax relief measures on state revenues and how they will be financed.

A senior Ministry of Finance official emphasized that since the tax reform is intended to be revenue-neutral, every proposal must be balanced with its associated costs. “Each proposed measure comes with a price tag and must be funded accordingly,” the official stated.

The tax reform consists of 15 phases in total, with the 14th and 15th being procedural. The main goal of the reform is to reduce administrative burdens for both taxpayers and businesses while ensuring a fairer redistribution of tax responsibilities.

To date, CypERC has held 40 rounds of consultations with key stakeholders across the market. A final meeting with all relevant entities is scheduled for late March before the plan moves forward for implementation.