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Cyprus Implements EU-Mandated 15% Tax Rate On Large Multinationals

Cyprus is set to introduce a 15% minimum tax rate for large multinational corporations, in compliance with the EU directive aimed at harmonising tax policies across member states. The move, endorsed by Cyprus’ Finance Minister Makis Keravnos, is expected to generate over €200 million in additional revenue. This decision, while marking a significant shift from the current 12.5% rate, aligns Cyprus with the broader OECD-led initiative to establish a global minimum tax rate. Despite concerns, Keravnos reassured that the change is unlikely to drive multinationals out of the country, as the directive applies EU-wide.

This adjustment reflects a crucial step in Cyprus’ ongoing efforts to maintain competitiveness while adhering to international tax standards. With the proposal now before the Cabinet and soon to be discussed in Parliament, the nation is poised to balance its attractive tax regime with the demands of a globalised economy.

The introduction of this tax rate signals Cyprus’ commitment to international cooperation on tax matters, aiming to prevent profit-shifting practices that have historically allowed large corporations to minimise tax liabilities. For Cyprus, a key hub for multinational firms, this move could redefine its positioning in the global business landscape, ensuring it remains a compliant yet competitive destination for international business.

While the increase may seem minor, the 15% rate represents a broader shift in global tax policy, driven by a collective effort to create a more level playing field for taxation. For Cyprus, traditionally seen as a tax-friendly jurisdiction, this could challenge its status, pushing it to leverage other competitive advantages beyond low tax rates, such as a robust legal framework, strategic location, and skilled workforce. The long-term impact on foreign direct investment will be a critical metric to watch as this policy unfolds.

EBA Tightens Focus On High-Risk Third-Party Arrangements To Streamline Banking Oversight

The European Banking Authority has issued new guidelines designed to sharpen supervision of third-party arrangements linked to critical functions, in a move intended to simplify parts of the EU banking regulatory framework while preserving robust risk controls.

A More Proportionate Supervisory Model

The new approach concentrates attention on arrangements whose disruption could materially affect a financial institution’s operations. By doing so, regulators and firms can direct resources toward higher-risk dependencies rather than spreading oversight too thinly across lower-risk service relationships.

In practice, the framework aims to reduce unnecessary operational and supervisory burdens associated with less material third-party arrangements, while maintaining strong standards for governance, resilience and risk management.

Covering The Full Third-Party Lifecycle

The guidelines apply to both ICT and non-ICT services, reflecting the increasingly interconnected nature of modern financial operations. Rather than treating technology risk in isolation, the EBA has adopted a more holistic approach to third-party risk management.

The framework spans the entire lifecycle of an arrangement, including risk assessment, due diligence, contracting, subcontracting, ongoing monitoring, documentation and exit planning. That breadth is significant: in financial services, risk does not end at onboarding. It evolves as dependencies deepen, services change, and counterparties expand their own supplier chains.

Feedback From Industry And International Standards

The EBA said the final version incorporates feedback from a public consultation, together with input gathered through targeted outreach. It also takes account of international standards, including the Basel Committee on Banking Supervision’s Principles for the Sound Management of Third-Party Risk.

That alignment matters. As banks and investment firms operate across jurisdictions and through increasingly complex vendor ecosystems, regulatory convergence helps reduce fragmentation and supports more consistent control frameworks.

A Transitional Period For Implementation

To support adoption, the EBA has предусмотрed a two-year transitional period, giving institutions and supervisors time to adapt to the new requirements in a proportionate and orderly way. The phased approach should help firms recalibrate internal policies, renegotiate contracts where needed and strengthen oversight of the most material external dependencies.

Broader Legal And Regulatory Context

The guidelines were developed under Directive 2013/36/EU, which requires the EBA to further harmonise governance arrangements, processes and mechanisms across EU institutions. In shaping the final text, the authority also considered several other key pieces of EU legislation, including the second Payment Services Directive, the Investment Firms Directive, the Markets in Financial Instruments Directive and the Markets in Crypto-Assets Regulation.

The regulation establishing the EBA was also taken into account, underscoring the breadth of the legal foundation behind the new framework.

What The New Rules Mean For Institutions

For banks, investment firms and other financial entities, the message is clear: not every outsourced service warrants the same level of regulatory attention. The new guidelines are designed to ensure that oversight is proportionate to the potential impact of failure, with greater scrutiny reserved for arrangements supporting functions that could seriously disrupt operations if compromised.

In a sector where resilience has become a board-level priority, the EBA’s move reflects a broader regulatory trend: fewer blanket requirements, more risk-based judgment and a sharper focus on material exposures.

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