Newsroom
The Cyprus Parliament was busy on Thursday, voting on a series of important bills that could reshape the island's economic landscape and support families. Among the most notable pieces of legislation were those addressing corporate taxation, parental leave, childbirth allowances, and the establishment of foreign university branches in Cyprus.
Tax on Multinational Corporations
One of the standout bills approved was aimed at imposing a 15% minimum tax on the profits of multinational companies with annual revenues exceeding €750 million. The bill was introduced to comply with an EU directive known as “Pillar 2,” which seeks to establish a global minimum tax rate for large corporations. The law was passed without controversy, as the government was facing the threat of economic sanctions from the European Court of Justice due to its delayed implementation.
The new tax will impact around 1,900 companies in Cyprus. While this is expected to boost state revenues by an estimated €200-250 million annually by 2026, businesses have expressed concerns over the measure’s potential to drive them out of the country. They have called on the Ministry of Finance to conduct a comprehensive study on the impact of the new tax and to introduce compensatory measures to mitigate any negative effects.
Parental Leave and Childbirth Allowance Reforms
Another significant piece of legislation passed on Thursday was aimed at enhancing parental leave and support for families. The new law extends the period during which parents can take parental leave, now available until the child reaches 15 years old. The duration of the parental leave allowance is also increased: 10 weeks for the second child, 12 weeks for the third, and 14 weeks for the fourth child and beyond. Additionally, parents of children with disabilities will be entitled to parental leave until their child turns 21.
Starting October 2024, the childbirth allowance will also increase: €1,000 for the first child, €1,500 for the second, €2,000 for the third, and €2,500 for the fourth and subsequent children. These measures are part of a broader strategy to tackle Cyprus’ low birth rate and provide better support for families.
However, the implementation of the paid parental leave is expected to be delayed until March 2025, as the government has cited logistical challenges. Some MPs raised concerns over the timing, particularly the opposition party ELAM, which criticized the bill for providing benefits to foreign parents.
Foreign University Branches in Cyprus
Another key bill passed was related to the establishment of foreign university branches in Cyprus. The law sets strict conditions for how these branches will operate, ensuring they meet quality standards and contribute to the competitiveness of the island’s higher education sector. Currently, only two Greek universities—Kapodistrian and Metsovio—are considering setting up branches in Cyprus.
The legislation clarifies that these branches must adhere to the same standards as local institutions. While some opposition MPs voiced concerns about the potential impact on Cyprus' public universities, the government emphasized that the move would boost the country's educational profile and attract international students, increasing revenues for the state.
Looking Ahead
These bills mark a significant shift in both economic policy and family welfare in Cyprus. While there are concerns over their implementation, particularly the tax and university measures, the government is hopeful that these reforms will address some of the island’s pressing issues, from its business climate to demographic challenges.
With the parliamentary votes now concluded, Cyprus is set to enter a new era of taxation, family support, and educational development—though the true effects of these changes will take time to unfold.
