Concerns over Two-Phase Approval of Tax Reform in Cyprus

The Government is expressing concern regarding the intention of DISY, DIKO, and EDEK to approve the tax reform in two phases. In the first phase, before the end of the year, the parties intend to vote on increasing the tax-free threshold to €20,500, changing the tax brackets, increasing the corporate tax to 15%, abolishing the deemed dividend distribution, and reducing the special defense contribution from 17% to 5%.

The remaining measures, concerning the fight against tax evasion, are scheduled to be discussed in the first months of 2026, which the Government opposes.

An official source stated that if the Parliament approves the reform package in its entirety, no later than the first quarter of 2026, the Tax Department will be able to impose the required taxes for the 2025 tax year.

Finance Minister Makis Keraunos is expected to hold talks with the leaders of the governing parties to provide clarifications on the contentious provisions.