MPs on Thursday held a first discussion of the amendments that the political parties will table regarding the government’s tax reform bills, with four of the parties – Disy, Diko, Edek and Dipa – largely being on the same page in terms of what changes they seek.

The parties’ amendments will be formally tabled at the next session of the House finance committee, scheduled for Monday.

The government wants parliament to pass the tax reform by year’s end, so that it can be implemented as of January 1 and apply for the 2026 tax year.

Committee chair Christiana Erotokitou summarised the amendments which four parties have co-signed.

Members of these parties – Diko, Edek, Dipa and Disy, the latter an opposition party – held a meeting with the finance minister earlier in the week. Not invited to that meeting were Akel, the Greens and Elam.

The combined votes of the four parties attending the meeting would be enough to pass the tax reform package.

This informal coalition proposes to raise the tax-free threshold to €22,000 from the €20,500 proposed by the government.

As to the tax brackets, they propose 20 per cent income tax for incomes from €22,001 to €32,000; 25 per cent from €32,001 to €42,000; 30 per cent from €42,001 to €72,000; and 35 per cent for incomes above €72,001.

Regarding tax credits for families with children and a joint family income up to €100,000, they propose €1,000 per parent per child, €1,250 for the second child, and €1,500 for the third child.

Also for families with an income up to €100,000, the tax discount on interest paid on performing loans would go to €2,000 – from the €1,500 proposed by the government. Tax discounts on rent would be increased to €2,000 from the €1,500 proposed by the government.

The four parties also propose to scrap stamp duties, and raise the tax-free threshold on capital gains from €20,000 to €30,000. For sales of agricultural plots, the tax-free threshold on capital gains would go up to €50,000 from €30,000.

Separately, Akel wants to raise the tax-free threshold on income tax to €22,500. The party also seeks to re-jig the income tax brackets, so that “we take more from higher income earners and ease the burden on lower income earners,” said Akel MP Andreas Kafkalias.

Akel also calls for the tax-free threshold on income tax, as well as the tax brackets, to be adjusted every three years based on an indexation formula.

The left-leaning party further proposes that families with children with disabilities be entitled to additional tax credits, regardless the age of the child.

Additionally, Akel’s amendments seek to permanently fix VAT on electricity to 5 per cent, zero per cent VAT on essential items, and 5 per cent VAT on energy upgrades to primary residences. The party also wants to tax the windfall profits of banks and of companies selling electricity generated via renewables.

For their part, the Greens want to raise the tax-free threshold to €22,000. They are “flexible” on the tax credits for families with children. The Greens also want to slash VAT to 5 per cent for the purchase and installation of photovoltaic systems.

Speaking to the media later, Dipa MP Alekos Tryfonides welcomed the fact that his party’s proposals had been “adopted” by the government.

The government says its tax overhaul will broaden the tax base, toughen enforcement and ease the burden on households and businesses.