Filenews 16 November 2025
On the day after the 25th birthday of the new taxpayers, their obligation to submit a tax return will come into force. This provision is included in the package of tax reform bills and is part of the measures that the Tax Department will take to combat tax evasion. Therefore, with the legislation, the submission of the tax return is made mandatory by all natural persons who are residents of the Republic aged 25 and over, regardless of whether they have taxable income or not.
25-year-old new taxpayers should submit their income returns within the timelines set by the competent authority, while in case of taxation, they should pay it immediately. It is recalled that in the context of the government's proposal of the tax-reform, the tax-free rate rises to €20,500 and this will increase depending on the composition of the family, incomes, mortgages and others.
In addition, the tax scales are differentiated to support the incomes of the low and middle strata of the population. It is not excluded that during the continuation of the discussion of the legislation in Parliament, some parties will demand that there be exceptions for specific categories of taxpayers.
It is worth noting that even with the current tax system, the submission of a tax return is mandatory for all taxpayers regardless of income. However, in the last five years (since its enactment) the law has never been implemented and the Council of Ministers, with a decree issued every year, exempts taxpayers with incomes of less than €19,500 (current tax-free). The reason for the non-implementation of the law and the exemption given is on the one hand the transition of the Tax Department to the Tax For All system, through which tax returns will soon be submitted, and on the other hand the various exogenous factors that affected the country, such as the coronavirus pandemic and the Ukrainian issue.
The executive considers it very important for everyone to submit tax returns, in order to know the profile of taxpayers, while it is also estimated that the measure will help encourage tax compliance.
Other measures to tackle tax evasion included in the tax reform, according to the Ministry of Finance, will contribute to the avoidance of abuses and the development of tax justice. Among other things, the rationalization of tax returns and the payment of the tax due, the fight against tax evasion and tax evasion, as well as the strengthening of the powers of the Tax Department for the collection of taxes due are promoted.
At the same time, administrative fines and financial charges are increased to strengthen voluntary compliance.
Rents and freezing of corporate changes
In addition to the mandatory submission of a tax return for everyone from the age of 25, other measures are included in the bills.
– The payment of rent exceeding €500 by bank transfer or electronic payment becomes mandatory,
– A provision is added so that a company that has outstanding tax obligations or is under examination, in case of a change or deletion of its directors or officers, is not valid,
– The mandatory submission of a tax return by cooperatives is introduced,
– The Tax Commissioner is given the opportunity to request the submission of a statement of assets and liabilities covering a period of eight years and the mandatory keeping of information supporting the tax return for eight years, after the actual date of submission of the return.
– The ability of the Tax Commissioner to require tax bank information for taxpayers is strengthened. According to technocrats, today there is a distortion, the Tax Department has the ability to receive data on taxpayers from banks abroad but could not do so for the data of taxpayers in banks in Cyprus. With the inclusion of the new provision, the Commissioner of Taxation will receive information on the deposits held by taxpayers in banks in Cyprus.
– Sealing of businesses in case of debts to the Tax Department, but also of non-issuance of legal receipt. During the consultations that took place during the summer between technocrats on the government side and affected professional bodies, safeguards were incorporated. In the final texts of the bills, it is clarified that the sealing of premises will take place after three written notices to the taxpayer, who will have the right to challenge the decision of the Tax Department in court.
AI on taxes
At the same time, according to the study of the Economic Research Center of the University of Cyprus, with the full digitization, electronic invoicing, the interconnection of the credit card terminals of various businesses with the systems of the Tax Department and in connection with the use of artificial intelligence tools that will contribute to risk analysis will enhance compliance and reduce tax evasion.
In fact, he cites the Greek myDATA system as an example. This system is the electronic platform of the Independent Authority for Public Revenue (IAPR) of Greece, through which businesses are required to submit their basic accounting and tax information electronically.
Specifically, businesses register their income and expenses, the details of sales/service documents, purchase invoices, depreciation, etc. They also proceed with the electronic issuance and transmission of invoices through the platform (and gradually mandatorily through e.
On paper, the interconnection of cash registers with tax systems
The budget of the Ministry of Finance for 2026 has included an item which will be used by the Tax Department to use modern methods of risk analysis.
Specifically, it will proceed with the purchase of services from specialized consultants for the development of robot capabilities and software, as well as artificial intelligence software for data analysis in the context of the new Tax For All computer system.
It will also purchase services for the development of artificial intelligence software of the "chatbot" type to serve the public within the framework of the new system. It is worth noting that in previous years, the budget of the competent ministry also included funds to cover the cost of interconnecting the systems of the Tax Department with the cash registers of businesses, however the budget of the following year did not include relevant appropriations.
Relevant studies were expected to be carried out, while a relevant provision has not been included in the legislative package for tax reform. In the past, it was estimated that the project would be implemented after the modernization of the infrastructure and the legal framework in relation to invoices and receipts. With the automatic interconnection, in real time, of the market with the Tax Department, the Department will be able to receive immediate and reliable information on the purchase and sale of trade. At the same time, with this system, the Tax Department will be able to react immediately to cases of tax evasion.
