December 13, 2021
Cyprus Finance Minister announces Government’s plan for tax reform in 2022
On 9 December 2021, Cyprus Finance Minister, Mr. Constantinos Petrides, presented the 2022 Budget to the House of Representatives and announced the Government's priorities for the Cypriot economy in the coming year.
One of the Government's priorities is to reform the country's tax framework in order to strengthen the competitiveness of the Cypriot economy and enhance Cyprus's position as a business center. The Minister also said the objectives of the tax reform are to reduce tax inequality, enhance transparency, simplify the tax system, and reduce the administrative compliance burden.
This Alert summarizes the proposed pillars on which the tax reform will be based.
In his speech, the Minister referenced the international agreement reached for the imposition of a minimum global corporate tax rate of 15% on large multinational corporations and the relevant Directive from the European Commission that is expected to follow as the impetus for revisiting the Cypriot tax framework and reducing administrative burdens associated with compliance.
Moreover, the Minister stated that the increase of the corporate tax in Cyprus from 12.5% to 15%, will not substantially affect the foreign investments in Cyprus as the country has other comparative advantages as an investment destination that balance this small increase in the corporate tax rate.
In order to achieve the Government's aims in relation to the tax reform, the Minister announced the Government's intention to examine the following matters as part of the reform:
Finally, the Minister emphasized that the objective is to have a fairer and fiscally neutral tax reform which will be completed within 2022.
For additional information with respect to this Alert, please contact one of the following:
Ernst & Young Cyprus Limited, Limassol
Ernst & Young Cyprus Limited, Nicosia