Cyprus’ parliamentary commerce committee is moving towards lowering the turnover threshold for companies eligible for a simple review of financial statements to €400,000, narrowing down the €900,000 level initially proposed by Disy.

The issue returned to the committee on Tuesday after the taxation department, the Central Bank of Cyprus (CBC) and the Association of Cyprus Banks raised objections to the wider expansion.

As a compromise, Disy MP and former party leader Averof Neophytou suggested the lower limit, arguing that the impact on public revenue would remain below 5 per cent of the state’s projected €8.1 billion intake for 2025.

According to figures presented by the tax department, raising the review threshold from €200,000 to €400,000 would place 56,590 companies, or 61.9 per cent of all businesses, under a simple review rather than a full audit.

These companies generated €358.6 million for the state in 2022, with receipts expected at €348.8 million this year.

By contrast, extending the threshold to €900,000, as suggested in the original Disy bill, would benefit 60,399 companies, or 66 per cent, from which the state currently collects €695m.

The debate is also shaped by a European directive that, since 2023, already subjects 51,075 companies with turnover up to €200,000 to review-only requirements, generating roughly €228m in 2022.

Although the committee asked the tax commissioner’s office to reassess the new compromise, officials have previously signalled that €300,000 would be preferable, as it would not significantly erode revenues.

Companies in this bracket number 54,549, contributing €301.7m in 2022 and an estimated €414.3m this year.

Even so, professional bodies, including the Institute of Certified Public Accountants of Cyprus (ICPAC) and the Cyprus Bar Association, backed the move to €400,000, saying smaller firms would benefit from lighter reporting obligations at a time of rising compliance costs.

During the session, several ministries reiterated concerns that the financial impact of the higher limit remains insufficiently substantiated, while the legal service noted that the adjustment does not raise legislative complications.