Cyprus’ Tax Commissioner Sotiris Markides, expressed concern on Friday over the growing trend of foreign companies and investment funds acquiring Cypriot businesses, including hotels, universities and hospitals. He raised the issue during a meeting of the House Finance Committee while discussing the government’s tax reform bill.
Markides explained that the bill introduces stricter anti-abuse provisions, as reduced taxation for Cypriot-owned businesses under the new rules meant previous anti-abuse measures could no longer be applied in the same way. He added that while the current tax system attracts foreign investment, it also allows foreign entities to acquire Cypriot companies, creating challenging conditions for competition. “What we have tried to do is correct this element,” he said.
Pushback against corporate tax hike
The Institute of Certified Accountants of Cyprus (ICAC) voiced opposition to the changes, highlighting the rise in the corporate tax rate from 12.5% to 15% as a major concern. The Cyprus Employers and Industrialists Federation (OEB), the Cyprus Chamber of Commerce and Industry (KEVE), the Chamber of Small and Medium-Sized Enterprises (KNE) and the Banks Association expressed agreement with the ICAC’s position.
Committee members also sought clarification on tax exemptions for donations to cultural institutions. AKEL MP Andreas Kafkalias noted that the bill’s wording could create different interpretations regarding which institutions qualify, pointing out that the Ministry of Culture does not formally approve institutions but may maintain a list of associations that receive grants.
A representative from the State Aid Department added that institutions operating as businesses - such as those selling products - should be excluded from the exemptions. Following these comments, Markides suggested that it might be wise to introduce a cap on the amount of donations to cultural institutions eligible for tax deductions.