Cyprus Hikes Corporate Tax

April 20, 2013 Taxation in Cyprus

Taxes in CyrpusNICOSIA – Cyprus, which currently has one of the lowest corporate tax rates in Europe, is taking the significant step of hiking corporate taxes by a quarter.

On April 18th the parliament of Cyprus passed several bills amending the country’s tax legislation, as part of the government’s efforts to secure the international loans needed to stave of a financial crisis in the country.

Amongst the changes which were made by the Parliament, was the approval of a hike to the country’s corporate tax rate from 10 percent to 12.5 percent, a move which is expected to raise approximately EUR 600 million in extra tax revenues per annum.

The parliament also approved a 0.04 percent increase to the levy on transactions involving credit institutions.

The 15 percent Cyprus Defence Levy applied on interest earnings will also be doubled, reaching 30 percent.

Alongside the tax hikes, it was also announced that in two weeks time the parliament will vote on a bill to implement a 2 percent across-the-board cut to public sector salaries.

The new measures are intended to demonstrate to other Eurozone countries that in the future Cyprus will be able to raise the funds necessary to meet its sovereign debt obligations.

While Cyprus is making several changes to secure the path to a bailout loan, the proposed EUR 10 billion in emergency lending from the European Commission still needs to be approved by other Eurozone countries and the parliament of Cyprus itself.

Even following the hike which the government of Cyprus agreed upon after extensive debates and consideration, the country will still have one of the lowest corporate tax rates in Europe, being 4th equal, alongside Ireland, Portugal and Lichtenstein.

Photo by Public Domain Photos