For the Government, tax reform is much more than a simple rearrangement of rates, as it constitutes an emblematic step that redistributes burdens fairly and makes the system simpler and more predictable, Deputy Minister to the President Irene Piki has emphasised.
Speaking in the context of the Institute of Certified Public Accountants of Cyprus (ICPAC) 'Tax Reform 2026' event, she stressed that the government's direction was and is clear. "A simple, transparent and effective tax system, with clear and tangible benefits for the economy and citizens. An effort that is part of our general policy for the modernisation of the country," she pointed out.
Noting that the new tax-free limit of €22,000, simpler scales, the abolition of the deemed dividend distribution and the substantial relief in the Extraordinary Defence Contribution to 5% give families and businesses a breather, enhancing liquidity and competitiveness, she pointed out that these are already having a positive effect on household disposable income, as with the January salary, approximately 200,000 taxpayers saw a net increase in earnings, while in 2026 approximately 30,000 individuals are expected to be fully exempted.
According to Piki, in the broader government planning, based on the philosophy of social liberalism, the goal remains constant: less tax burden, more disposable income. "A breath of liquidity and incentives for investment in businesses, and a digital administration that respects the time of citizens and professionals," she added.
The Deputy Minister to the President also referred to the strong and undisputed image of the Cypriot economy.
"With growth for 2025 approaching 4%, Cyprus continues to move at rates significantly higher than the Eurozone average. At the same time, our fiscal discipline is bearing fruit: public debt has already fallen below 60% of GDP, while surpluses - consistently above 3% - shield the country's credibility," she noted, emphasising that the labour market, with unemployment at historically low levels, is now moving in conditions of full employment.
This dynamic course was recently sealed by the upgrade of Cyprus' credit rating to 'A' by Scope Ratings. “This is a significant development, as it is the first assessment that incorporates our tax reform, effectively recognizing the progress on debt, the stability of the banking system and our fiscal consistency,” Piki stressed.
Despite the adjustment of the corporate tax, the competitiveness of the Cypriot economy is not only maintained, according to Piki, but is also strengthened through a fairer and more efficient framework. “A framework that ensures a stable institutional environment and targeted incentives, such as the special 8% rate for stock options,” she added.
"We keep the tax burden predictable and growth-friendly, making Cyprus an attractive destination for high-value-added investments. Attracting these international businesses is the catalyst for creating a healthy and strong ecosystem of local businesses that grow around them. Fairer taxation for Cypriot businesses allows them to join this international value chain, enhancing their sustainability and extroversion," she noted, among other things, explaining that the tax reform was built on these foundations.
Piki also called on businesses, professionals, and consultants to take advantage of the new framework. "We are committed to stable rules, rapid reactions, and meaningful dialogue with institutional partners," the Deputy Minister to the President emphasised.
(Source: InBusinessNews)
