Cabinet approves financial incentives for greener businesses

The Finance Ministry on Wednesday announced that the Cabinet has approved a bill amending the Income Tax Law, allowing for an additional tax exemption, in the form of a capital deduction for specific capital expenditures, for Cypriot businesses who want to implement a range of energy-saving measures.

According to the announcement, businesses who wish to go ahead with upgrading their building’s energy efficiency will be entitled to an increased capital deduction of 7 per cent, instead of the 3 per cent granted under the existing legislative framework.

In addition, the announcement clarified that this is applicable to specific capital expenditures made within the tax years 2023, 2024 and 2025.

Furthermore, an increased capital allowance of 20 per cent, rather than 10 per cent under the existing legislative framework, will be granted to businesses for machinery and equipment connected to renewable energy systems, as well as technical energy efficiency improvement systems.

The above is applicable for businesses’ capital expenditure incurred within the tax years 2023, 2024 and 2025.

Finally, the ministry said that new commercial electric motor vehicles, as well as taxis and buses, are granted an increased capital allowance of 25 per cent, instead of the 20 per cent granted under the existing legislative framework, on capital expenditure incurred within the tax years 2023, 2024 and 2025.