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Comprehensive Guide To 2026 Tax Reform And Income Tax Deductions

The Tax Directorate has unveiled a comprehensive guide detailing the 2026 Tax Reform, income tax provisions, and entitlements to tax deductions. Published on Friday, the guide is available on the official website of the Tax Directorate under a dedicated section for Tax Reform 2026. Access the information directly via the Tax Reform 2026 page on the Ministry of Finance website at www.mof.gov.cy/tax.

Key Elements Of The Guide

The publication offers detailed insights and resources, including:

  • An editable PDF version of the Tax Deductions Claim Form (Τ.Φ.59) for the 2026 fiscal year;
  • An explanatory manual outlining the application of the tax reform for individual taxpayers residing in Cyprus starting from 2026;
  • A section featuring Frequently Asked Questions and corresponding answers, with updates to be provided as needed;
  • Practical examples demonstrating the application of the tax reform for individual taxpayers, with additional scenarios to be added over time.

Expert Insight And Upcoming Tools

Tax Officer Sotiris Markidis, in an interview with the publication “F,” underscored the guide’s role in helping taxpayers navigate the new legal framework set to take effect on January 1. Mr. Markidis also announced the imminent launch of an Income Tax Calculation Tool. This innovative tool will allow users to enter their income across various categories as well as applicable deductions (including allowances and exemptions). Based on one’s personal status—whether single, part of a family, or a single-parent household—the tool will display the income tax amounts before and after the reform, clearly highlighting the tax benefits inherited from the new structure.

Action Required From Employers

Markidis advised employers, particularly those whose employees are impacted by the revised tax policies and new personal deductions, to review the manual, FAQs, and provided examples carefully. He recommended that they complete the Tax Deductions Claim Form (Τ.Φ.59) for the 2026 fiscal year at the earliest opportunity and deliver it to their employers to ensure the prompt implementation of the updated income tax withholding parameters.

Cyprus Introduces €200 Million Support Measures To Cut Energy And Food Costs

Comprehensive Relief Measures For A Resilient Economy

The government of Cyprus introduced support measures exceeding €200 million to reduce household expenses and support key sectors. The package targets energy costs, food prices, tourism and agriculture. Measures come in response to rising costs and supply pressures. Implementation begins in April and May 2026.

Energy And Fiscal Reforms

The government will reduce VAT on electricity for households to 5% from May 1, 2026, to March 31, 2027. The measure is expected to lower energy bills. Special consumption tax on transport fuels will decrease by 8.33 cents per liter between April and June 2026. Policy targets fuel-related costs.

Broadening The Zero VAT Initiative

Authorities will expand the list of products with zero VAT. Meat, poultry and fish will be included from April 1 to September 30, 2026. Existing zero-VAT categories already include fruits and vegetables. The government also decided not to introduce a green tax on fuels, avoiding an additional cost of about 9 cents per liter.

Sector-Specific Supports

The package includes a 30% wage subsidy for hotel employees for April 2026. Measure supports tourism businesses during the early season. Support for airlines aims to maintain connectivity with key destinations. The agriculture sector will receive subsidies covering 15% of costs for fertilizers and supplies in April and May.

Economic Stability, National Security

President Nikos Christodoulidis said economic stability remains a priority for the government. He noted that growth, fiscal balance and inflation trends support current policy decisions. Statement links economic policy with broader national priorities. The government continues to monitor external risks.

Ensuring Consumer Protection

Furthermore, the government has mandated rigorous market oversight and intensified inspections to prevent exploitative pricing during this period of economic intervention. This proactive stance ensures that the benefits of the measures directly serve the citizens without unintended inflationary impacts.

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