The position that tax reform can act as a lever of positive impact for the real economy, especially for businesses with a substantial presence and activity in Cyprus, was supported by Christos Charalambides, Partner and Head of Tax Advisory Services at PwC Cyprus.
Referring to the new tax framework, in a panel discussion that took place at the 9th Cyprus International Tax Conference – Cyprus Tax Reform 2026: Implementation, Impact & Positioning in a Changing Global Tax Landscape, he focused on the practical consequences of the changes for businesses and their shareholders.
According to Charalambides, for operating companies that are substantially active in Cyprus, the impact of the reform is expected to be overall positive for the local economy. As he explained, the increase in the corporate tax rate is gradually being absorbed by the markets and is a challenge that the Cypriot economy has faced in the past. For sectors with high profit margins, the burden is estimated to be more manageable, while for sectors with lower margins, such as industry or agriculture, a reassessment of their strategy may be required.
At the same time, he noted that the increase in corporate tax, although affecting the comparative position against jurisdictions with lower rates, is not expected to lead to substantial changes in the business models, supply chains or operational footprints of companies. Instead, businesses are urged to focus on optimizing their efficiency, pricing policy and overall business organization.
He placed particular emphasis on the abolition of the institution of the imputed dividend distribution, which he described as a development with a substantial impact According to the expert, this measure corrects a long-standing structural distortion that burdened Cypriot shareholders, reduces the administrative burden and makes local corporate structures more attractive and efficient. Despite the fact that it could initially be considered limited in scope, its impact in practice is estimated to be significant, as it strengthens cash flow management and reduces the effective tax rate for shareholders.
Referring to the reduction in dividend taxation, Charalambides stressed that this is a particularly substantial change for Cypriot tax residents and private investors, who seek higher net returns from their activities. As he concluded, the combination of these measures creates a more favorable environment for investments and strengthens the dynamics of the local market in a period of increased international challenges.
(Source: InBusinessNews)
