1. Taxation of Provident & Pension Funds Funds tax-exempt for 20+ years; no EU pressure to change. 29 of 36 OECD countries don't tax fund returns. Unfair to employees, civil servants, and lower-income earners. Hurts long-term savings and Cyprus's fund industry competitiveness.

2. Corporation Tax Increase (12.5% → 15%) Justified as offsetting SDC dividend reduction (17% → 5%), but the OECD Pillar Two argument is misapplied — Pillar Two only affects MNEs with €750M+ revenue (<2% of Cyprus companies). Frequent rate changes undermine Cyprus's stability as an international financial centre.

3. Excessive Tax Commissioner Powers Proposed powers (suspending operations, seizing shares, blocking property transfers) bypass court oversight. Risks legal uncertainty and damages Cyprus's prestige. Better solution: faster, more efficient courts.

Bottom line: Reform is generally a positive step, but these 3 areas need reconsideration to preserve Cyprus's competitiveness as an international financial centre.

Cyprus tax residents are taxed on all chargeable income accrued or derived from all sources in Cyprus and abroad. Non-tax residents are only taxed on their income accrued or derived from sources in Cyprus. An individual is tax resident in Cyprus if he spends in Cyprus more than 183 days in any one year.

Cyprus tax residents are taxed on all chargeable income accrued or derived from all sources in Cyprus and abroad. Non-tax residents are only taxed on their income accrued or derived from sources in Cyprus. Certain types of income are subject to SCD
(See article on the taxation of investment income https://shiakas.com/taxation-of-cyprus-investment-income/)

Corporate Income Tax (CIT)

All companies that are tax residents of Cyprus are taxed on their income accrued or derived from all sources in Cyprus and abroad.

The standard CIT rate in Cyprus is 12.5%.

Interest received by companies in the ordinary course of their business, including interest closely connected to the ordinary course of business, is also considered as ‘active’ interest income and is only taxed under CIT (after deducting allowable expenses) at the standard CIT rate of 12.5%.