Filenews 23 January 2026 - by Eleftheria Paizanou
Strengthening the competitiveness of businesses and providing incentives to attract additional foreign investment in our country is promised by the tax reform that will be implemented from the 1st of January.
In total, 14 changes have been made for businesses, which it is hoped will contribute to making the business environment fairer, more modern and more competitive. The Department of Taxation is already conducting training seminars for professional and business bodies to assimilate the amendments and changes in the new legal framework.
According to the Tax Department, the tax reform strengthens the competitiveness of businesses, competitiveness and the Cypriot economy.
Among other things, it provides for a reduction in the tax on real dividends, the abolition of the deemed distribution of dividends and stamp duties, a special tax rate for Stock Options, independent taxation of crypto-assets and increased discounts for donations and sponsorships.
In detail, the changes that apply to businesses from January 1, 2026 are as follows:
– Increase in corporate tax from 12.5% to 15%. A study carried out by the Centre for Economic Research of the University of Cyprus, before the approval of the relevant bill, showed that the state with the existing number of companies on the island will collect an amount of €240 million.
An amount that corresponds to the amount of tax deductions that the state will grant to natural persons, due to the composition of the family, the number of children, for loans, for rents and for green investments.
– Tax on real dividends, reduced from 17% to 5%. From the estimates of the JIT, it is expected that the state will collect an amount of €130 million.
– Abolition of the deemed distribution of dividends, which will contribute to the investment of the profits of the companies without any particular tax burden.
– Abolition of stamp duties. It was an outdated law that had been in force since 1963. The abolition of these fees will speed up business agreements as it simplifies procedures, reduces costs and strengthens efforts for new investments.
– Stock Options: Special rate of 8% up to €1 million/10 years.
- Crypto-assets: Independent taxation of 8% on net profit.
– Discount of up to €50,000 per tax year for donations/sponsorships to approved cultural institutions.
– First listing of shares on a recognized stock exchange: Deduction of first listing expenses up to €300,000.
– Granting a super discount to employers who pay ATA to their employees, equal to twice the additional ATA paid within the year.
– Research and Development Expenditure: Extension of the 20% super-deduction for expenses incurred within the years up to and including the year 2030.
– Green capital expenditures: Extension of the period for granting accelerated capital discounts for expenses incurred within the years up to and including the year 2030.
– Capital expenditure on agricultural and livestock production: Granting of accelerated capital discounts to 25%
– Extension of the loss transfer period to seven years. This measure will benefit small and medium-sized enterprises that face losses in their first years of operation, to postpone the payment of taxes to future years when they will be more profitable
– Maintenance of a Cyprus audited transaction file: A significant increase in the limits under which businesses are obliged to keep a Cyprus audited transaction file to €10 million regarding financing transactions, to €5 million with regard to the purchase and sale of goods and to €2.5 mil. for other transactions.
At €300,000 finally locked the limit of the turnover of the companies that will receive an overview of their financial statements, from €200,000 that were applied before the unanimous approval of the two DISY law proposals. With this data, 54,549 businesses with a turnover of €300,000 will receive an overview of their financial statements, instead of the full audit process, by submitting audited financial accounts.
According to data from the Tax Department, in 2022 the revenues from this category of companies were €301.7 million, while last year they recorded revenues of €414.3 million.
From 2023 until today, 51,075 businesses with an annual turnover of up to €200,000 were surveyed. The total receipts that the state had in 2022 from these companies were €227.8 million, while last year revenues of €306.8 million were generated.
The original DISY law proposal provided for an increase in the turnover of businesses that will go through a review to €900,000, however, after the reactions of the Tax Department, the Central Bank and the banks, the bar was lowered to €400,000. Yesterday, with an oral amendment submitted by DIKO to the Plenary Session of the Parliament, the amount was differentiated again and finally companies with a turnover of up to €300,000 will be reviewed.
With the second DISY law proposal, ICPAC is designated as the competent authority for the determination of Financial Reporting Standards. The duties, powers and responsibilities of ICPAC include, inter alia, the formulation of Financial Reporting Standards, which are applied to the preparation of financial statements, which are submitted to the Minister for approval. They also include the evaluation of the effectiveness of the implementation of the Financial Reporting Standards and the submission of recommendations to the Minister of Finance for their amendment or the implementation of new Financial Reporting Standards, the consultation with the professional bodies of the Republic and other stakeholders, the monitoring and evaluation of developments in the International Financial Reporting Standards and the International Financial Reporting Standard for small and medium-sized enterprises and monitoring the process of the European Financial Reporting Advisory Group for the validation of International Standards.
At the same time, the Minister of Finance will be responsible, inter alia, for approving the Financial Reporting Standards submitted to him by the competent authority, informing the respective authorities of the European Commission in relation to the adoption of the proposed Financial Reporting Standards, for their approval and publication in the Official Gazette of the Republic in Greek and/or English.
