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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 Economy Outperforms EU Benchmarks With 4.5% Quarterly Growth

The Cypriot economy recorded an impressive 4.5% year-on-year growth in the fourth quarter of 2025, according to preliminary estimates from the Statistical Service. This performance represents a notable acceleration, with a seasonally adjusted quarterly increase of 1.4% compared to the previous period.

Quarterly Performance Surpasses Expectations

Based on Eurostat data, Cyprus has significantly outpaced its European counterparts. While the Eurozone achieved an average growth rate of 1.3% and the European Union registered 1.5%, Cyprus clearly outperformed both. Such robust quarterly performance underlines the nation’s strategic economic positioning amid global market uncertainties.

Full-Year Projections And Fiscal Discipline

For the entire year 2025, growth is forecasted at 3.75%, exceeding earlier predictions from the Ministry of Finance and several domestic and international agencies, which had estimated an increase between 2.9% and 3.5%. This optimistic projection is supported by a low inflation environment and conditions of near-full employment.

Sustainable Growth Amid Global Uncertainty

Despite increased international volatility, Cyprus continues to demonstrate a resilient economic dynamic. Experts assert that a commitment to prudent and disciplined fiscal policies will bolster the nation’s ability to maintain medium-term growth rates above 3%. This strategic approach offers a strong competitive edge, much like other success stories in high-growth markets where sound economic management has proven vital.

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