Parliament plenary approved the tax reform, voting five of six executive bills as amended by the House Finance and Budget Committee.
Also approved: majority parties’ emergency bill fully abolishing stamp duties and international trusts bill. Only capital gains tax bill passed unanimously; others by majority, with AKEL opposing two, ELAM one, independent socialist MP Kostis Efstathiou one or two.
Numerous amendments passed with bills.
Core income tax changes
Reform core includes extensive changes to personal and corporate income taxation from January 1, 2026: non-taxable threshold rises to €22,000, revised and expanded tax brackets, new deductions for families, housing costs, rents, home energy upgrades, electric vehicle purchases. Corporate tax rate increases to 15%.
Defense contribution reforms
Significant changes to Special Defense Contribution: abolishes levy on deemed dividend distributions post-2026, reduces rate to 5% for actual dividends, eliminates rental levy, introduces anti-abuse measures for disguised distributions. Regulations for taxing interest, dividends, non-residents’ income.
Enhanced tax collection
Emphasis on modernizing tax assessment and collection: mandatory declarations for most individuals and entities, extended record-keeping periods, strengthened Tax Department audit and collection powers, new asset and share attachment mechanisms for large debts with safeguards.
Bills’ passage greenlights comprehensive tax framework restructuring from January 1, 2026.
Also read: Parties unite against taxation of provident funds
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