The Cyprus International Businesses Association (CIBA) has sent a letter to Finance Minister Makis Keravnos, raising a series of questions regarding the proposed tax reform and its impact on foreign investments and international businesses operating in Cyprus.

The letter, signed by CIBA board president Doxia Nikia Hadjivassiliou, was also addressed to Deputy minister to the president Irene Piki, the chair and members of the House finance committee, as well as the working group responsible for the reform.

Hadjivassiliou stated that CIBA has always supported a comprehensive restructuring of Cyprus’ tax framework to enhance economic competitiveness while remaining in line with European Union regulations and commitments.

However, she stressed that any changes must also consider the global economic and legal landscape, including developments in the United States under the strategic cooperation agreement.

CIBA confirmed that it has thoroughly reviewed the materials related to the proposed tax reform, which were published online.

Before submitting its official recommendations, the association is seeking clarifications on various key issues affecting international businesses.

It has also proposed a meeting with the finance minister to discuss and exchange views on these concerns.

Among the issues raised, CIBA is particularly focused on potential increases in corporate tax, the methodology used to calculate tax revenues in relation to economic growth, and whether the ultimate goals of the proposed reforms align with increasing GDP and attracting foreign direct investment.

At the end of 2024, Cyprus introduced a law imposing a minimum corporate tax rate of 15 per cent on the accounting profits of entities that are part of multinational or large domestic groups with consolidated annual revenues exceeding €750 million. This adjustment was made to comply with EU regulations.

However, this decision came just before former US President Donald Trump announced that the United States would withdraw from the OECD-led global minimum tax agreement.

Originally agreed upon in 2021 by nearly 140 countries, the agreement aimed to establish a unified minimum corporate tax rate for multinationals.

According to preliminary estimates, the association noted, Cyprus has seen some foreign businesses leave the country following the introduction of the new tax law.

As Cyprus competes with both European and non-European jurisdictions for international investment, this trend highlights the need to maintain and improve its competitive position.

At the same time, CIBA said, the government has received warnings from various stakeholders about potential negative consequences for the Cypriot economy if the corporate tax rate is further increased from 12.5 per cent to 15 per cent.