Tax reform proposals for Cyprus, taking into account both the experience from tax reform in Greece and other international trends, were discussed at a conference held in Nicosia on Thursday, June 9th.

The conference titled "Proposals for Tax Reform in Cyprus and the Experience from Greece and International Trends" was organized by the Cyprus Chamber of Commerce and Industry (CCCI), the Institute of Certified Public Accountants of Cyprus (ICPAC), and the European Public Law Organization (EPLO).

In his opening remarks, Angelos Grigoriadis, Tax Advisor and member of the Scientific Committee of the Academy of Taxation and Accounting of EPLO, emphasized the importance of tax reform proposals that aim to support employment, promote competitiveness and economic growth of the Cypriot economy, and act as incentives to reduce tax evasion and undeclared work. He highlighted that the stability of the tax framework and further simplification of the tax system would help in attracting foreign investments and further developing the services sector.

Christodoulos Angastiniotis, President of CCCI, referred to the changes that have occurred in various aspects of the Cypriot economy in the last two decades, as well as the current negative circumstances such as the war in Ukraine and disruptions in inflation, energy costs, interest rates, entrepreneurship, and citizens' living standards. "Considering all these factors, we are obliged to revisit our tax system and strive to modernize, simplify, and make it more functional and user-friendly," he said.

Furthermore, he cited Greece as an example of the positive outcomes that can be achieved through tax system renewal, noting that under the governance of Kyriakos Mitsotakis, significant changes were made to the Greek tax system. Today, Greece is considered an ideal investment destination, while bureaucracy has been reduced, and citizens no longer shy away from the state and tax authorities as they did in the past.

He also mentioned that in the international arena, particularly in Europe, there is a continuous processing of tax data. In addition to the EU's efforts for a unified corporate tax rate of 15% for all member states, he stated that other tax readjustments are being promoted that "whether we like it or not, they affect us”. He concluded that “therefore, considering the overall landscape, we believe that taxation should always be in our focus, aligning with the economic and societal data. The economy and society cannot move in one direction while the tax framework goes in another. We need tax-economy-society harmonization. This is the message of the CCCI, and this is what we will support in the consultations that we hope will take place soon."

Pieris Markou, President of the Institute of Certified Public Accountants of Cyprus (ICPAC), expressed the institute's stance on tax reform and stated that cooperation among all relevant stakeholders, with support from specialized experts in the field, including external experts if necessary, is required to achieve the necessary modernization and simplification.

Moreover, he emphasized the need for a bold and comprehensive tax reform that would result in a modern tax framework capable of effectively serving both the immediate and future needs of the country, the foreign investment sector, and the entire Cypriot economy.

Georgios Mavraganis, President of the Scientific Committee of the Academy of Taxation and Accounting of EPLO and former Deputy Finance Minister of Greece, highlighted the challenges faced by the Greek tax system prior to the reform. These included complex and outdated legislation, dysfunctional tax services, fragmented tax administration, limited utilization of electronic tools and services, and revenue losses.

The completion of the reform brought about significant changes, including the establishment of an independent authority, incentives for tax residency, continuation of reduced tax concentration rates, adoption of digital tools, suspension of VAT on newly constructed residences, abolition of extraordinary contributions, enhanced information utilization, codification of tax incentives, expansion of tax arbitration, and elimination of cumbersome documentation requirements.

In addition, Athena Kalyva, Head of the Economic Unit of the Permanent Representation of Greece to the EU, emphasized that tax reforms should also address geopolitical developments such as energy prices, inflation, and business liquidity. She stressed the importance of ecological transition and fair burden distribution, particularly to support vulnerable groups. She further emphasized the need for a flexible and adaptive tax system that can effectively respond to ongoing challenges while maintaining its developmental characteristics.