The Tax Reform has come into force and its results are already reflected in the daily lives of citizens, families and businesses, through the reduction of the tax burden and the increase in net disposable income, an official government announcement notes.
According to the announcement, approximately 200,000 taxpayers have already seen an increase in their net income with the payment of the January salary, while it is estimated that 30,000 individuals will now be completely exempt from income tax in 2026. The data confirms that the tax reform is achieving its main objective, returning income to citizens, supporting the middle class and strengthening social cohesion, through a fairer and more modern tax framework.
Strong support for families and employees
According to the Tax Commissioner, Soteris Markides, a family with four children and an income of €130,000 is expected to see an annual increase in its disposable income of approximately €7,000, while for a single-parent family with three children and an income of €70,000 the corresponding aid exceeds €4,000, the announcement notes.
A key element of the reform is the increase in tax-free income to €22,000, which means that even more workers will not be taxed at all . This is a regulation with unique characteristics at the European level, as it is not applied to this level and to this extent in any other country in the European Union. Cyprus, which was already among the countries with the highest tax-free threshold, has made another increase.
At the same time, the new fairer tax scales and targeted tax exemptions based on family composition significantly reduce the tax burden for thousands of households.
A breather for small and family businesses
The benefits for the real economy are also significant. The changes affecting businesses, with the abolition of deemed dividend distribution and the large reduction in the Extraordinary Defense Contribution , are estimated to benefit over 30,000 small family businesses, enhancing their liquidity and competitiveness.
At the same time, new tax incentives for innovation, green investments and modern forms of business activity are shaping a stable and attractive tax environment , oriented towards sustainable development.
The Tax Reform, implemented after two decades by the government, lays solid foundations for a fairer society and a more competitive economy, with policies that have a direct and substantial impact on the daily lives of citizens, the announcement says, inviting people to visit https://www.gov.cy/taxreform/ for more information and the digital tax income calculation tool. Please note the site is currently available only in Greek.
"Cyprus is changing. With responsible policies that make a difference," the announcement concludes.
(Source: InBusinessNews)
