Cyprus prepares major tax reform: draft laws expected to be finalized in the coming days

The Ministry of Finance of Cyprus announced that the draft laws on tax system reform are in their final stage of preparation and will be presented to Parliament within a few days. The reform will be one of the largest in recent years, aimed at simplifying the taxation system, increasing its fairness, and adapting it to modern economic realities.

The key changes will affect income tax, corporate profit tax, small business reporting, and control over tax evasion. According to the Minister of Finance, the goal of the reform is to create a “fair, sustainable, and modern tax system capable of supporting the economy and social balance.”

Main changes for citizens and businesses

1. New income tax scale. It is planned to reduce rates for citizens with average incomes and revise the upper threshold for high-income groups. This should ease the burden on the majority of the working population and increase consumer activity.

2. Simplified reporting for the self-employed and small businesses. Simplified declaration forms and electronic templates will be introduced for micro-enterprises, which will reduce the time spent on tax reporting and administrative costs.

3. Adjustment of corporate tax. A reduction in the rate for innovative companies and startups is being considered to stimulate investment and create new jobs.

4. Anti-evasion measures. The reform provides for the introduction of new financial control mechanisms, including digital transaction tracking, data exchange between departments, and closing legal loopholes that allow income to be hidden abroad.

How this will affect citizens

Experts believe that the main beneficiaries of the reform will be the middle class and small businesses, which will receive tax relief and a simpler reporting system. For high-income citizens, however, a slight increase in the tax rate is possible.

At the same time, the introduction of new digital tools will require accountants and entrepreneurs to adapt to updated declaration and reporting formats. The Ministry of Finance assures that the transition will be gradual, with consultations and technical support available through online portals.

According to the Minister, the reform is aimed at ensuring that “Cyprus’s tax system remains competitive, fair, and sustainable in the long term.” The new rules are expected to take effect at the beginning of the 2026 fiscal year.