Nicosia: Cyprus has received no information or indication that major companies are planning to leave the country because of the implementation of the 15% minimum tax under Pillar Two of the Organisation for Economic Co-operation and Development (OECD), Finance Minister Makis Keravnos said on Thursday. Speaking at the Ministry of Finance, Keravnos addressed concerns raised by reports suggesting pressure from the European Union could lead to companies relocating due to the new tax regime.
According to Cyprus News Agency, Keravnos described such reports as originating from 'individual voices' which might serve personal interests or stem from 'certain obsessions.' He explained that the Finance Ministry is in the process of preparing an amendment bill following a European Commission decision. The changes are part of the consultation process with the Commission and necessary for Cyprus to meet its obligations under the OECD framework.
Keravnos clarified that the 15% minimum tax does not apply to all companies in Cyprus. It targets large multinational and domestic groups with annual revenues exceeding £750 million. Even for companies meeting this threshold, a 15% tax is not guaranteed. If Cyprus's effective tax rate, currently at 12%, is below the 15% minimum, the difference is collected under complex rules.
He emphasized that this measure is part of an international agreement involving the OECD, G20, and EU, incorporated into EU law, rather than a unilateral decision by Cyprus. With over 2,000 foreign companies operating in Cyprus, including parent and subsidiary companies, the government has 'no information or indication' of companies planning to relocate to other EU countries.
Keravnos reassured that 'Cyprus remains a competitive tax environment,' citing the country's strategic position and potential roles in projects like the India-Middle East-Europe Economic Corridor (IMEC), alongside its high-level professional services.
On the topic of inflation, Keravnos noted that the latest Consumer Price Index figure of 3.5% indicates inflationary pressures are more limited than the 4% forecast. From January to August, consumer prices rose by about 2%, suggesting a moderate increase in household living costs. The Harmonised Index of Consumer Prices was significantly impacted in August by a 13.3% increase in restaurants and accommodation services due to seasonal tourism demand.
Addressing unemployment, which reached 7.2% in August, Keravnos stated that the figure was not representative of the broader labour market but was a temporary situation linked to the expiry of contracts in sectors such as public administration, education, and administrative and support activities.
'Noise is not an argument in economic policy,' Keravnos said. 'The data is the argument.' He concluded that based on available data, Cyprus is not at an impasse but is adapting to a changing international environment while protecting the economy and enhancing the country's credibility.