Cyprus Introduces Tax Reform Εffective 1 January 2026

Cyprus has approved a far-reaching tax reform, marking the most significant overhaul of its tax framework in more than 20 years. The new regime, effective 1 January 2026, introduces a 15% corporate tax rate, while pairing this increase with targeted incentives for businesses and meaningful relief for middle-class families.

The reform aims to enhance Cyprus' competitiveness, support households, attract investment, and strengthen tax transparency, while also equipping the Tax Department with additional tools to combat tax evasion.

Key aspects of the tax reform include:

• Complete abolition of deemed dividend distribution
• Reduction of the Special Defence Contribution on dividends from 17% to 5%