Cyprus Tax Reform: Balancing Competitiveness With Fiscal Integrity

by THEFUTURE.TEAM

September 10, 2025

Government Initiative Under Scrutiny

The forthcoming tax reform in Cyprus has ignited vigorous debate among key economic stakeholders. As the public consultation period concludes, both the Cyprus Chamber of Commerce and Industry (Keve) and the Institute of Certified Public Accountants of Cyprus (Selk) have articulated their perspectives, underscoring the need for an equilibrium between robust fiscal policies and maintaining the island’s competitive allure for international investors.

Keve’s Support Coupled With Strategic Caution

In a comprehensive six-page memorandum, Keve lauded the government’s commitment to combating tax evasion and enhancing collection mechanisms—a decisive step towards greater market transparency and fairness. However, the chamber also warned that any missteps in altering Cyprus’s long-standing, competitive tax regime could erode one of its foremost advantages in attracting foreign capital.

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Keve emphasized that a balanced approach is imperative to support local industries ranging from manufacturing to services, while concurrently bolstering Cyprus’ status as an attractive investment destination. The memorandum highlighted several reform proposals, including the elimination of deemed dividend distribution for exclusively Cypriot companies and a significant reduction in the special defence contribution from 17% to 5%, measures that had long been championed by the business community. Furthermore, Keve noted that despite a nominal corporate tax rate increase to 15%, the effective tax rate could decline substantially, ensuring a minimum of 15% and a maximum of 19.25%, compared to today’s rates of 23% and 27.4%, respectively.

Selk’s Call For Comprehensive Overhaul

In contrast, Selk adopted a more critical tone in its submission, disputing nearly all aspects of the draft legislation. The institute’s president, Odysseas Christodoulou, underscored the necessity of constant enhancement in both the quality and efficiency of business services to preserve Cyprus’ reputation as a premium business destination. In his correspondence with Finance Minister Makis Keravnos, Christodoulou argued that any effective tax system must rest on the three pillars of competitiveness, fiscal sustainability, and the protection of social welfare.

Looking Ahead: Constructive Dialogue And Future Engagement

As both Keve and Selk present their divergent views, the road ahead appears to be one of constructive dialogue. With Selk’s leadership scheduled for an extensive meeting with the Tax Commissioner on September 10, 2025, further exchanges are anticipated to refine the reform package. This ongoing debate not only reflects the complexities inherent in fiscal reformation but also underscores the delicate balance required between fostering economic growth and maintaining fiscal discipline.

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Central Bank Of Cyprus Balance Sheet Reflects Strong Eurosystem Position

by THEFUTURE.TEAM

February 17, 2026

Overview Of Financial Stability

The Central Bank of Cyprus (CBC) has released its latest balance sheet, reaffirming its steadfast role within the Eurosystem. The balance sheet, featuring total assets and liabilities of €29.545 billion, underscores the institution’s stable financial posture at the close of January 2026.

Asset Allocation And Strategic Holdings

Governor Christodoulos Patsalides issued the balance sheet, which details the CBC’s asset composition under the Eurosystem framework. Notably, the bank’s gold and gold receivables amounted to €1.635 billion, providing a significant hedge and stability to its balance sheet. Additional asset categories include claims on non-euro area residents denominated in foreign currency at €1.099 billion, while claims on euro area residents in both foreign and domestic currency add further depth to its portfolio.

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The most substantial asset category, intra-Eurosystem claims, reached €19.438 billion, an indication of the CBC’s deep integration with its European counterparts. Furthermore, euro-denominated securities held by euro area residents contributed €6.587 billion. Despite a marked emphasis on these areas, lending to euro area credit institutions in monetary policy operations recorded no activity during the period.

Liability Structure And Monetary Policy Implications

On the liabilities side, banknotes in circulation contributed €3.218 billion. Liabilities to euro area credit institutions associated with monetary policy operations were notably the largest single category, totaling €17.636 billion. Supplementary liabilities included those to other euro area residents, which aggregated to €4.989 billion, with government liabilities playing a predominant role at €4.754 billion.

Other liability items, such as claims related to special drawing rights allocated by the International Monetary Fund at €494.193 million, and provisions of €596.571 million, further articulate the CBC’s exposure. Revaluation accounts stood at €1.643 billion, and overall capital and reserves were confirmed at €333.822 million, completing the picture of a well-capitalized institution.

Conclusive Insights And Strategic Alignment

The detailed breakdown illustrates the CBC’s sizeable intra-Eurosystem exposures, reinforcing its central role within Europe’s monetary landscape. With an asset-liability balance maintained at €29.545 billion, the CBC’s financial position remains robust, indicating a commitment to structural stability and strategic risk management.

This fiscal disclosure not only provides transparency into the CBC’s operations but also serves as a benchmark for comparative analysis among other central banks within the Eurosystem, highlighting the intricate balance between asset liquidity, regulatory oversight, and monetary policy imperatives.

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