Tax Reform As A Modernization Catalyst: PASYDY And KEVE Applaud Progressive Change

by THEFUTURE.TEAM

December 23, 2025

Stakeholders Hail A New Era In Cyprus Tax Policy

The recent passage of the tax reform bills has been met with optimism by key industry organizations. Both PASYDY and KEVE have welcomed the legislation, praising it as a significant step toward modernizing Cyprus’ tax framework—with PASYDY emphasizing fairness and economic stability, and KEVE focusing on competitiveness and investment confidence.

Pasydy Celebrates A Modern And Equitable System

PASYDY expressed satisfaction with the executive initiative to enact an all‐encompassing tax reform, highlighting the importance of a modern and equitable tax system as a cornerstone for economic stability, social justice, and sustainable growth. The association underscored that the new legislation will contribute substantially to curbing tax evasion while strengthening the state’s revenue collection mechanisms.

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Notably, PASYDY recalls its March 2022 submission to the Minister of Finance, which recommended adjustments to personal income tax brackets—citing deflationary effects from the previous revision nearly two decades ago. Several of its proposals were incorporated into the final bill, including the expansion of tax brackets and income criteria for tax deductions, particularly benefiting families with children. These measures are expected to offer annual savings of between €500 and €2,000, providing significant relief to the middle class.

Keve: A Milestone For Transformation And Competitiveness

KEVE, representing the broader business community, has characterized the reform as a transformational milestone. The chamber’s leadership believes the overhaul aligns the tax system with the demands of a modern economy, thus enhancing Cyprus’ international competitiveness. KEVE sees the reform as a historic opportunity to fortify the country’s economic stability, transparency, and appeal as a destination for business and investment.

KEVE’s response highlights several key enhancements, including the elimination of the imputed dividend distribution and a reduction in the Extraordinary Defense Contribution on dividends to 5%. In its strategic dialogue with policymakers, the chamber placed a premium on legal certainty and a stable business environment—ensuring that revenue collection is balanced with judicial oversight, and that administrative provisions remain clear to foster both international outreach and investment attraction.

Moreover, the reform is lauded for its substantial societal impact. KEVE pointed to the increased tax-free threshold and targeted support measures for families as instrumental in bolstering disposable income and addressing declining birth rates. The chamber has committed to closely monitoring the implementation of the reform as it continues to serve as a key institutional partner in advancing economic progress and prosperity across Cyprus.

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ECB Launches Geopolitical Stress Tests For 110 Eurozone Banks

by THEFUTURE.TEAM

March 9, 2026

The European Central Bank is preparing a new round of geopolitical stress tests aimed at assessing potential risks to major financial institutions across the euro area. Up to 110 systemic banks, including institutions in Greece and the Bank of Cyprus, will take part in the exercise, which examines how geopolitical events could affect financial stability.

Timeline And Testing Process

Banks are expected to submit initial data on March 16, 2026. Supervisors will review the information in April, while the final results are scheduled to be published in July 2026. The process forms part of the ECB’s broader supervisory work to evaluate financial system resilience under different risk scenarios.

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Geopolitical Shock As The Primary Concern

The stress tests place particular emphasis on geopolitical risks. These may include armed conflicts, economic sanctions, cyberattacks and energy supply disruptions. Such events can affect banks through changes in market conditions, borrower solvency and sector exposure. Lending portfolios linked to regions or industries affected by geopolitical developments may face higher risk levels.

Reverse Stress Testing: A Tailored Approach

Unlike traditional stress tests that apply the same scenario to all institutions, the reverse stress test requires each bank to define a scenario that could significantly affect its capital position. Banks must identify a geopolitical shock that could reduce their Common Equity Tier 1 (CET1) ratio by at least 300 basis points. Institutions are also expected to assess potential effects on liquidity, funding conditions and broader economic indicators such as GDP and unemployment.

Customized Risk Assessments And Supervisor Collaboration

This methodology allows banks to submit risk assessments based on their own exposures and operational structures. The approach is intended to help supervisors understand how geopolitical events could affect institutions differently and to support discussions between banks and regulators on risk management and contingency planning.

Differentiated Vulnerabilities Across Countries

A joint report by the ECB and the European Systemic Risk Board indicates that countries respond differently to geopolitical shocks. The Russian invasion of Ukraine led to higher energy prices and inflation across Europe, prompting central banks to raise interest rates. Belgium, Italy, the Netherlands, Greece and Austria experienced increases in borrowing costs and lower investor confidence. Germany, France and Portugal recorded more moderate changes, while Spain, Malta, Latvia and Finland showed intermediate levels of exposure.

Conclusion

The geopolitical stress tests will not immediately lead to additional capital requirements for banks. Their results will feed into the Supervisory Review and Evaluation Process (SREP). ECB supervisors may use the findings when assessing capital adequacy, risk management practices and operational resilience at individual institutions.

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