The Institute of Certified Public Accountants of Cyprus (ICPAC) has submitted its positions on the proposed tax reform to the Minister of Finance, Makis Keravnos, including a set of 14 new suggestions aimed at refining the tax system.
The suggestions were made within the context of a recent consultation based on the University of Cyprus’ Economics Research Centre’s recommendations.
ICPAC has proposed measures such as tax loss carry forward, qualifying refundable tax credits, intellectual property nexus regime, and incentives for foreign investment funds.
These suggestions are part of ICPAC’s response to the government’s tax package, which the institute recognises as limiting the tax burden on taxpayers and businesses, while consolidating the tax base.
However, ICPAC has highlighted areas of concern, calling for a simplification of the tax system, reduction of bureaucracy, and a more predictable tax framework.
ICPAC underlined: “We also expected to see proposals that will reduce the ever-increasing in recent years administrative compliance costs for small and medium-sized enterprises, which undoubtedly constitute the backbone of the Cypriot economy.”
The institute supports the abolition of deemed dividend distribution and a 5% withholding tax on actual dividends for Cyprus tax residents who are also domiciled in Cyprus.
ICPAC further stated: “Our basic position is to enhance the value and credibility of Cyprus as a business destination of choice and quality, by continuously upgrading the product and services offered, as well as by simplifying, strengthening and effectively implementing the country’s internal infrastructure, processes and operations (beyond taxation), thus offering value-added services at a competitive cost.”
The institute has requested additional information on several points, including the imposition of a higher withholding tax rate on concealed dividend distributions and anti-abuse measures for close-structured companies.
ICPAC has also expressed reservations about lifting the corporate veil and adjusting salaries to market rates, citing the need for legal clarity and proportionality.
On the Non-Dom regime, ICPAC agrees with the principle but seeks further details, particularly on the extension after 17 years and the calculation of the annual fee.
Additionally, while supporting recommendations for the green transition and digital transformation, ICPAC emphasises the need for more targeted measures.
