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The Institute of Certified Public Accountants of Cyprus is raising concerns over Cyprus’ proposed tax reform, arguing that while the new framework aims to ease the tax burden on individuals and businesses, it remains overly complex. The Association is calling for a more streamlined system, with fewer bureaucratic hurdles and greater predictability to enhance the country’s appeal as a business hub.
According to Kathimerini's Dorita Yiannakou, one of the key issues flagged by business groups is the lack of structural reforms, including the establishment of a Tax Council, better tax dispute resolution, regulation of tax consultants, and full digitization of the Tax Department’s functions. The chamber also emphasizes the need for a clear and stable tax framework that will encourage investment in infrastructure, such as schools, housing, and transport, alongside social support initiatives.
A major point of contention is the proposed increase in corporate tax from 12.5% to 15%. The chamber suggests that this hike could be balanced out by reducing employer contributions to social funds, preventing additional financial strain on businesses. It also opposes the suggestion that authorities should have the power to disregard the corporate structure and tax shareholders as individual business owners.
The Association has also voiced concerns, particularly over new property taxes, arguing that they complicate rather than simplify the system. There are fears that local governments may introduce additional taxes on top of the proposed changes, creating further financial burdens.
Another point of criticism is the proposed €800 levy on companies with high turnover or assets that have not paid taxes. Business representatives argue that struggling companies should not be hit with extra fees at a time when many are already facing financial difficulties.
To maintain Cyprus’ competitive edge, the chamber has proposed additional measures, including tax incentives for businesses relocating assets from other countries and the introduction of a flexible tax classification system for foreign investment funds. It has also suggested limiting capital gains tax on property sales to transactions involving unrelated parties.
The debate over the tax reform is set to continue, with an Economic Advisory Committee meeting scheduled for tomorrow, chaired by Finance Minister Makis Keravnos. The discussion will include key government officials, business associations, and trade unions, all of whom will weigh in on the preliminary framework for the new tax system.
