Nicosia: The new taxation framework approved on Monday is set to guide the country's economy towards sustained growth, enhanced competitiveness, and robust support for Cypriot families. This was the announcement made by Minister of Finance Makis Keravnos, who expressed satisfaction with the adoption of the tax reform by the House of Representatives' Plenary Session.
According to Cyprus News Agency, the tax reform was a pivotal pre-election promise of the Government of Nikos Christodoulides, now realized within the broader governmental policy agenda aimed at modernizing society. The reforms seek to bolster entrepreneurship, improve the national image, elevate citizens' living standards, and enhance economic resilience.
The Minister emphasized that the new tax framework, slated to commence on 1 January 2026, promises a fairer tax distribution and fosters social cohesion. Described as a fairer system, it aims to strengthen the real economy, boost the competitiveness of Cypriot businesses, and attract productive high-quality foreign investments.
Specifically addressing individual taxation, the reform significantly alleviates household tax burdens, especially for families with children. This measure aims to provide tangible support to vulnerable groups and the middle class, regarded as the economy's backbone.
The Finance Minister assured both businesses and citizens that the newly approved tax system would propel the country's economy towards sustained growth and offer effective support for Cypriot families in the coming years.
Earlier, the Plenary Session of the House approved the tax reform by passing five of the six bills presented by the executive branch. These bills were shaped following amendments deliberated by the Parliamentary Committee on Finance and Budget.
Central to the reform are significant changes to the income taxation of individuals and legal entities starting 1 January 2026. These include raising the tax-free threshold to 22,000 pounds, revising and expanding tax brackets, and introducing new tax deductions for families, housing expenses, rents, energy-efficient home upgrades, and electric vehicle purchases. Concurrently, the corporate tax rate will rise to 15%.
With the approval of these five bills, Parliament has sanctioned a comprehensive restructuring of the tax framework effective from 1 January 2026.