President of the Republic Nikos Christodoulides has welcomed the launch of discussions at the Parliamentary Committee on Finance regarding the government’s Tax Reform, describing it as one of the most significant structural changes in recent decades.
In a written statement, President Christodoulides said the reform marks the transition to a fairer and more modern tax system that places households and businesses at its core, as it directly impacts their daily lives, stability, and prospects.
‘Our collective goal must be the approval and implementation of this reform by January 1, 2026,’ he underlined.
The President noted that the reform strengthens social cohesion and provides tangible support to families and the middle class. For the first time in twenty years, the tax-free income threshold will rise to pound 20,500, while targeted deductions will further increase this amount depending on each family’s composition and expenses.
As he also pointed out, substantial incentives are being introduced for mortgage loan interest, rent on first residences, and green investments, ‘measures that support citizens’ daily lives and the transition toward a sustainable economy.’
The President noted that the competitiveness of Cypriot businesses will also be boosted through a reduction in the tax on actual dividends from 17% to 5% and the abolition of deemed distribution, correcting long-standing distortions and encouraging the reinvestment of profits in productive sectors.
‘The Government’s responsible fiscal policy has created the conditions for this major reform milestone,’ the President said. ‘Amid successive upgrades by international credit rating agencies placing the Cypriot economy in the ‘A’ category-and with forecasts pointing to stable growth and low inflation-our country moves forward with planning and determination’ he went on.
He added that from January 1, 2026, citizens and businesses will operate within a tax framework that is fairer, simpler, and more conducive to growth. ‘This is a reform not just about numbers, but about the future of Cypriot society and the economy itself,’ he stressed.
Concluding, President Christodoulides said that ‘a changing Cyprus needs a tax system worthy of its potential and ambitions.’