Strategic Overhaul of Cyprus Tax Policy
The organization EDek has formally presented its comprehensive proposals for overhauling Cyprus’s tax legislation, outlining a series of measures aimed at easing the burden on companies and individual taxpayers. In a detailed letter addressed to both the President of the Republic and the Parliament, EDek emphasized that unless their proposals are integrated into forthcoming bills, they will move to submit amendments.
Reshaping Corporate Tax Relief
Central to EDek’s strategy is the adjustment of tax rates for corporate entities. The proposals include reducing the corporate tax rate and the special defense levy for small businesses, while reinstating property tax on real estate assets valued above €3 million. Additionally, EDek advocates for enhanced tax credits for individuals and the doubling of tax deductions available to lower-income groups. Despite the increase in the corporate tax rate from 12.5% to 15%, a significant reduction in the defense levy on corporate dividends—from 17% to 5%—serves to balance the overall tax landscape, disproportionately benefiting larger companies.
Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram
Encouraging Differential Relief for Small Enterprises
EDek calls for the introduction of a tiered taxation system that provides more substantial relief for small and micro-enterprises. They propose adjusting the defense levy and reducing the corporate tax rate to 10% for these businesses, suggesting that any shortfall in public revenue could be compensated by an increase in the levy for larger corporations. This approach is designed to create a more equitable fiscal environment where the tax benefits are aligned with company size and capacity.
Enhancing Incentives for Property Owners
The reform agenda also recognizes the financial pressures facing property owners. EDek recommends maintaining the current 3% defense levy on rental incomes but proposes converting this amount into tax credits or deductions for individuals in the lower and middle income brackets. This measure, they argue, would alleviate the tax burden on those most affected by rising costs, given that property owners predominantly fall within these income groups.
Streamlining Tax Credits for Individuals
For individual taxpayers, EDek’s proposals focus on simplifying and expanding tax credits. They recommend doubling the deductions available for families earning up to €45,000 and extending eligibility thresholds from €80,000 to €100,000 for incomes between €45,000 and €100,000. Furthermore, EDek advocates eliminating bureaucratic hurdles—such as the mandatory certification for the repayment of housing loans—arguing that such requirements impede both the speed and efficiency of tax filing and review processes.
Revisiting Property Taxation
In addition to reforms affecting companies and individuals, EDek pushes for the reintroduction of the property tax on assets exceeding €3 million, a measure supported by research from the University of Cyprus. This tax would exclude properties held as business inventories or those generating operational income, ensuring that the levy targets high-value assets. EDek also supports the proposal by other political factions to eliminate the stamp duty, while cautioning that any revenue shortfall must be offset by adjustments in other tax areas.
Conclusion
EDek’s proposals signal a robust and balanced approach to tax reform in Cyprus, seeking to promote fiscal fairness by tailoring relief measures to both corporate scale and individual income levels. As these proposals are debated in the corridors of power, their ultimate impact on the nation’s economic structure will be closely monitored by both policymakers and the business community.
