Parliamentary Finance Committee set new sessions for Thursday and Friday at 9:00 AM to discuss six tax reform bills. Parties showed unified opposition to provisions taxing provident funds, agreeing to remove them from legislation.
Sessions allow MPs, with Tax Commissioner Sotiris Markides, to clarify technical issues from party amendments before plenary on December 22.
Technical review essential
Committee President Christiana Erotokritou explained the package involves complex technocratic changes beyond rates, tax-free thresholds, and deductions. “All parties rightly want continued discussion with the Tax Commissioner to fully understand the spirit and letter of laws we’ll vote on.”
Full comprehension of changes – tax scales or intricate economic aspects – remains their duty.
Key amendments presented
Tax Department representative read article changes/deletions from committee discussions, starting with Income Tax Law, then Special Defence Contribution and Capital Gains Tax.
Erotokritou outlined four parties’ (DISY, DIKO, EDEK, DIPA) amendments:
Tax Scales:
- €0-€22,000: tax-free
- €22,001-€32,000: 20%
- €32,001-€42,000: 25%
- €42,001-€72,000: 30%
- €72,001+: 35%
Child/student deduction criteria:
Family income: €100,000 (up to 2 children), €150,000 (3-4), €200,000 (5+); same for single-parent families.
Deductions:
- 1st child: €1,000 (per spouse)
- 2nd: €1,250
- 3rd+: €1,500 (doubled for single parents)
Loan Interest/Rent Deductions: €2,000 (from €1,500), €100,000 income cap
Capital Gains Exemptions:
- General land sale: €30,000 (from €20,000)
- Farmers’ agricultural plots: €50,000 (from €30,000)
- First home: €150,000 (from €100,000)
Stamp duties abolished; provident funds taxation removed. “We disagree with government bill’s provision. We restore current status.” Government seeks business activity taxation per State Aid Controller Stella Michailidou, citing state aid otherwise.
Parties align on opposition
Committee President Christiana Erotokritou confirmed every party rejects taxing provident funds. “We’ll submit a joint amendment to remove this provision entirely,” she said. No one supports taxing the funds’ business activities, current rules stay the same. If changes are needed later, new bills can address them.
DISY’s Georgiades: Stick to agreed amendments
DISY MP Harris Georgiades called for keeping tax incentives intact, using only committee-approved amendments, no surprise changes. He welcomed written suggestions from Tax Commissioner Sotiris Markides.
AKEL’s Kavkalias: Close on tax-free threshold
AKEL MP Andreas Kafkalias said they’re ready to finalize amendments before plenary. Parties nearly agree on €22,000 tax-free income (AKEL proposed €22,500) and lower tax brackets. AKEL’s main push: higher progressive rates for top earners.
AKEL also wants:
- Delete provident funds tax
- Clarify vague rules on taxing fund income/benefits
- Triennial inflation adjustments
- Match family child deductions
- Keep loan restructuring tax breaks
AKEL’s extra proposals
- 5% VAT on electricity
- 0% VAT on basic food essentials
- 5% VAT for home energy upgrades/extensions
- 0.1% annual property tax on homes over €1M
- Scaled yearly fees for companies based on assets
Ecologists’ Papadouris: some agreements, some debates
Ecologists leader Stavros Papadouris OK’d €22,000 tax-free limit and is discussing rates over €70,000 (AKEL wants €100,000). He accepted child deductions despite preferring €1,500 per child, but pushes €2,500 loan interest/rent relief (vs. €2,000 agreed). Agreed on €450,000 capital gains exemption, awaits Competition Authority on funds tax, supports ending stamp duties.
Positive momentum
Post-session, Erotokritou satisfied discussions concluded, parties presented essential amendments improving framework. DISY-DIКО amendments preliminarily gain majority support.
“Pro-taxpayer, fiscally sustainable without destabilizing Cyprus economy, our prized asset,” she noted. DISY/DIКО convergence unlikely criticized, moving right direction; more signatures possible.
Also read: 2026 budget debate underway in Parliament
Subscribe to our youtube channel for the latest updates.
