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12° Nicosia,
21 April, 2024
 

Cyprus delays 15% multinational tax enforcement

EU threatens action over tax delay

Newsroom

Cyprus has yet to enforce the new EU rules introducing a minimum effective tax rate of 15% for multinational corporations operating within EU member states.

According to an article by Panayiotis Rougalas, published in Kathimerini's Wednesday's edition, alongside nine other countries, Cyprus was expected to have implemented the new framework from January 1, 2024, unanimously agreed upon by member states in 2022, formalizing the EU's adoption of the "pillar 2" rules as part of the global tax reform agreement in 2021.

According to information from a Commission official, the European Commission has initiated a countdown to issue a reasoned opinion to Cyprus. Infringement proceedings are legal actions through which the Commission calls on member states to comply with EU law. The process could culminate in the Commission taking the matter to the EU court and imposing fines.

The rules apply to every large group, including the financial sector, with combined financial income exceeding €750 million annually and with a parent or subsidiary company established in an EU member state. In Cyprus, such companies number around 15-20.

The Commission argues that the 15% tax on multinationals brings greater fairness and stability to the tax landscape in the EU and globally, making it more modern and better suited to today's globalized, digital world.

The minimum corporate tax is one of the two working directions agreed upon by members of the Inclusive Framework of the Organisation for Economic Co-operation and Development (OECD)/Group of 20, a working group of 141 countries and jurisdictions focusing on the two pillars to address the tax challenges of the digital economy. They worked towards a consensus-based global solution for corporate tax reform, resulting in a global agreement among 137 jurisdictions in October 2021. Discussions focused on two broader issues: Pillar 1, the partial reallocation of taxing rights, and Pillar 2, the minimum taxation level of profits for multinational enterprises.

As committed, the EU is now implementing Pillar 2 of the global agreement, making the global minimum effective corporate tax a reality for large group companies established in the EU.

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Cyprus  |  tax  |  economy  |  finance  |  Europe

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