The House Finance Committee on Monday approved the appointment of the tax tsar and his deputy.
Yiannakis Lazarou, a state attorney, was appointed to head the new department, a merger between inland revenue and VAT departments.
Finance Minister Harris Georgiades said it would take a couple of years for full operational integration.
The minister said a management unit for large taxpayers would be up and running by the end of the year.
The single tax authority will comprise a tax commissioner and deputy commissioners, to be hired on five-year contracts with an option for a five-year renewal.
Integration of the two departments was a condition set by Cyprus’ international lenders as part of structural changes aimed at streamlining public administration.
Under the terms of the bailout, Cyprus must “reform the revenue administration with the objective to reinforce the efficiency and effectiveness of revenue collection capacity and the fight against tax fraud and evasion, with a view to increasing fiscal revenue.”
The reforms include a programme of short-term measures to enhance compliance, efficiency and effectiveness as well as a comprehensive long-term reform covering risk management and the establishment of a new integrated function-based tax administration structure.