EU warns Cyprus on 15% business tax compliance

The European Commission has warned Cyprus and several other countries to step up their game on important new tax and data rules. Cyprus, along with Spain, Latvia, Lithuania, Poland, and Portugal, is under pressure to enforce a minimum 15% tax rate for big multinational companies, a key part of the EU’s efforts to ensure fair taxation.

The EU directive, which should have been implemented by the end of 2023, aims to stop large companies from dodging taxes by setting a baseline tax rate. While most EU countries have complied, Cyprus and the others have lagged behind. They now have two months to get in line or risk being taken to the European Court of Justice, where they could face fines.

In addition to tax issues, the European Commission is also pushing Cyprus to improve corporate transparency. A rule requires multinational companies earning over €750 million to publicly disclose their income taxes to ensure they’re paying their fair share. Cyprus and five other countries haven’t fully adopted this rule yet, which the EU says is crucial for maintaining public trust in the tax system.

The Commission is also cracking down on Cyprus and 17 other countries for not properly implementing the Data Governance Act. This law, effective since September 2023, is designed to make data sharing across the EU smoother and more secure. It sets rules for data intermediaries and encourages the voluntary sharing of data for public benefit, like medical research.

The European Commission’s warnings highlight the importance of these rules in promoting fairness and transparency. Cyprus and the other countries have two months to address these issues or face possible legal action from the EU’s highest court.