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Big companies are not packing their bags and leaving Cyprus because of the new global minimum tax, Finance Minister Makis Keravnos said Thursday, dismissing reports of a corporate exodus as speculation driven by “individual voices.”
According to Keravnos, the government has received no information that large companies are planning to relocate because of the 15% minimum tax introduced under the OECD’s Pillar Two rules.
But Keravnos stressed that the measure does not place a blanket 15% tax on every company operating in Cyprus.
“The only thing we are seeing is a continuous increase in registrations of foreign companies in Cyprus,” he said.
The issue has caused concern in recent days, particularly among people working in the professional services, technology, and shipping sectors, where foreign companies support thousands of jobs.
But Keravnos stressed that the measure does not place a blanket 15% tax on every company operating in Cyprus. A small family business, shop, or start-up will not suddenly be pulled into the new system.
The rules apply only to very large multinational and domestic groups with annual revenues exceeding €750 million. Even then, the calculation is not as simple as applying a flat 15% rate to their total income.
Instead, companies whose effective tax rate falls below 15% may have to pay a top-up amount to bring them to the minimum level. The system is part of an international agreement involving the OECD, G20 and European Union, rather than a tax Cyprus decided to introduce on its own.
The Finance Ministry is preparing an amendment to the legislation following consultations with the European Commission. Keravnos described this as a normal part of bringing Cyprus into line with its European and international obligations.
He said more than 2,000 foreign parent companies and subsidiaries are registered in Cyprus and argued that the island remains attractive because of its location, professional services, and role in emerging trade and energy routes.
Only a handful of EU countries have been given temporary exemptions until 2029 because they host fewer than 12 multinational parent companies. After that, all member states will operate under the same rules.
Asked who he believed was fuelling the warnings about companies leaving, Keravnos replied with the ancient expression “those who understand, understand.”
Prices are still rising, but less than feared
Keravnos also sought to calm concerns over the latest inflation figures after consumer prices rose 3.5% in August compared with the same month last year.
He said the figure remained below an earlier forecast of 4%, while inflation averaged approximately 2% during the first eight months of the year.
That may look controlled on a government spreadsheet, but households are still paying more than they did a year ago. The latest figure means prices continue to rise; they are simply rising more slowly than feared.
The August increase was heavily influenced by restaurants and hotels, where prices climbed 13.3%. Keravnos attributed much of that rise to the summer tourism season, when the number of people on the island swells and demand for accommodation and dining increases sharply.
Jobless figures reflect end of temporary contracts
The finance minister also addressed a 7.2% annual increase in the number of registered unemployed people in August.
Crucially, that does not mean Cyprus has an unemployment rate of 7.2%. It means the number of people registered as unemployed rose by that percentage compared with a year earlier.
Keravnos said the increase was largely caused by temporary contracts ending in education, public administration, and administrative support services. He described it as a snapshot of a particular month rather than evidence of a wider collapse in the labor market.
“In economic policy, noise is not an argument. Data is the argument,” Keravnos said, insisting that Cyprus is adapting to a changing international economy rather than facing a dead end.
*With information from OECD background on Pillar Two
