This year, Cyprus has taken decisive action to leverage its position as a key center for international business. Amid global pressures to align with international tax standards, the country has introduced targeted tax reforms to stay competitive while ensuring compliance. Below are the main updates shaping Cyprus’s tax system this year.

Global Minimum Tax: A New Era for Multinationals

Cyprus, known for its attractive corporate tax rates, will see a shift in 2024 with the introduction of the OECD’s global minimum tax. This new rule sets a 15% minimum corporate tax rate for large multinational companies with annual revenues over €750 million. While this change directly impacts big businesses that previously enjoyed a 12.5% tax rate, it reinforces Cyprus’s commitment to global tax transparency and cooperation.

Transfer Pricing Updates: Ensuring Compliance

Transfer pricing has been a priority for Cyprus since 2022, and the government is refining these rules in 2024. The new updates ensure alignment with OECD guidelines and place greater emphasis on documentation and reporting for transactions within corporate groups. This evolution shows Cyprus’s commitment to international standards while offering businesses more clarity and predictability.


Notional Interest Deduction (NID): Attracting Investment

The Notional Interest Deduction (NID) regime is a key part of Cyprus’s strategy to attract foreign direct investment. In 2024, improvements include a revised calculation method and higher deduction thresholds, making it more attractive for companies injecting new equity. These changes aim to draw in long-term investment and contribute to Cyprus’s growth as a business-friendly destination.


Refined IP Box Regime: Supporting Innovation

Cyprus continues to support innovation-driven businesses with updates to its Intellectual Property (IP) Box regime in 2024. The revisions broaden the definitions of qualifying IP and introduce anti-abuse measures, ensuring compliance with the OECD’s BEPS standards. These changes strengthen Cyprus’s position as a desirable place for holding and developing intellectual property, attracting companies focused on innovation.

Digital Taxation: Preparing for the Future

As the digital economy grows, Cyprus is considering introducing a digital services tax (DST) in 2024. This potential tax would apply to large digital companies operating within Cyprus, aligning with EU efforts to modernize taxation for the digital age. Although still in discussion, this shows Cyprus’s proactive approach to adapting its tax system for a rapidly evolving global economy.


Additionally, as part of its efforts to combat tax avoidance, Cyprus has strengthened its measures under the EU’s Anti-Tax Avoidance Directive (ATAD). This includes stricter rules on controlled foreign companies, hybrid mismatches, and exit taxes.

Conclusion: A Forward-Thinking Approach

The 2024 tax reforms are designed to balance international compliance with maintaining Cyprus’s competitiveness. These changes present both challenges and opportunities for businesses, but by staying informed, companies can navigate the evolving landscape and benefit from Cyprus’s role as a leading business hub.