Finance Minister Haris Georgiades confirmed reports that the government plans to increase the corporate tax rate from 12.5% to 15%.
Speaking on Tuesday, he explained that the matter has been discussed with the private sector and that no final decision has been taken yet.
The Cyprus Chamber of Commerce and Industry (CCCI), the Cyprus Employers and Industrialists Federation (OEB) and the Institute of Certified Public Accountants (ICPAC) are in talks with the government in order to reach a mutually beneficial formula.
The Finance Minister made it clear that the issue is not aimed at increasing state revenue as the state finances show a surplus. He also noted that an excessively low tax rate limits the possibility of signing new double tax avoidance agreements and serves as an excuse to place Cyprus in blacklists on money laundering.
According to reports, as a result of the increase in the corporate tax rate, the government will raise an additional 170m euros annually and intends to return 200m to businesses through other tax reliefs.
The government proposals include a reduction of the dividend tax from 17% to 15%, abolishing stamp duty, reducing capital gains tax from 20% to 15% and the reduction of tax on interest from 30% to 15%.