Cyprus tax reform expected to bolster foreign investment climate

Invest Cyprus described parliament’s approval of the tax reform as a very positive development, saying it closes an important, if not the most important, chapter for business and foreign investment in Cyprus.

With the reform passed this week, the organisation said “Cyprus’ attractive investment environment is being maintained and further strengthened”, supported by a competitive tax framework that reinforces entrepreneurship while enhancing predictability for investors.

The reform, as mentioned in its statement, introduces several changes affecting legal entities.

These include the complete abolition of the deemed distribution of dividends, alongside a reduction in the withholding tax on the actual distribution of dividends to 5 per cent from 17 per cent.

At the same time, stamp duty is abolished, exemptions for capital gains tax purposes are increased, stock options receive more favourable treatment, and corporate tax rises to 15 per cent from 12.5 per cent.

In an interview with InBusinessNews, Invest Cyprus chief executive Marios Tannousis said “it is certainly very positive that the tax reform was voted on,” explaining that foreign investors prioritise stability, predictability and clarity when assessing potential destinations.

Against that backdrop, he said Invest Cyprus welcomed the parliamentary approval, as it believes the reform will significantly support the investment climate and, in particular, efforts to attract foreign capital.

“One of Cyprus’ core advantages,” he said , “remains its tax regime, a point consistently reflected in surveys conducted by the organisation.”

Indeed, he said, those surveys show that taxation is among the most heavily weighted factors for foreign investors when deciding where to invest, including which countries and jurisdictions to consider.

Tannousis said the reform “would take Cyprus into 2026 with a clear and defined tax framework, something foreign investors, and investors more broadly, have sought from the outset of the process”.

He further stated that Invest Cyprus “congratulates and thanks the government, the Finance Ministry and the parliament of Cyprus, as well as the private sector, for contributing to an effort that allows a very important, and possibly the most important, chapter for business and foreign investment in Cyprus to be brought to a close”.