Intro blog by Marios Papageorgiou, Tax Expert & Founder of TaxApp
As of 1 January 2026, Cyprus’ revised tax framework has entered into force, introducing changes across the country’s direct taxation system. The reform affects businesses, professionals, and employees and represents the most extensive update to the framework in over two decades.
To place these changes in context, it is useful to consider the evolution of Cyprus’ tax system. In the early 2000s, Cyprus transitioned from a dual, offshore-oriented regime to a unified system aligned with EU standards. During the years that followed, tax revenues increased from approximately EUR 3.8 billion in 2005 to around EUR 8.5 billion, while the number of registered companies rose from about 130,000 to approximately 200,000. Over the same period, Cyprus further developed its role as an international business jurisdiction. While EU and EEA accession influenced this trajectory, the structure of the tax framework itself was among the factors shaping these outcomes.
The 2026 reform builds on this existing framework and is designed to address several policy considerations. These include reducing differences in tax treatment between locally owned and foreign-owned (non-dom) businesses, as well as revisiting elements of personal taxation. Measures such as the increase in the corporate tax rate to 15% and the reduction of dividend tax for local shareholders adjust the distribution of the tax burden across different categories of taxpayers, while aiming to preserve Cyprus’ overall competitiveness within the European environment.
In parallel, the reform reflects broader international trends toward increased tax transparency and compliance. These developments are consistent with evolving global and EU standards and form part of a wider shift affecting multiple jurisdictions.
TechIsland Reference Material for the tech sector
In this context, and with the aim of supporting tech companies and IT entrepreneurs, TechIsland has prepared a presentation summarising the key elements of the Cyprus Tax Reform. The material highlights aspects of particular relevance to the tech sector and provides an overview to assist businesses operating in or from Cyprus in understanding the updated framework.
The article and accompanying presentation are provided as a practical reference for general information purposes and as a basis for further consideration, and do not constitute legal or tax advice. Businesses and individuals are encouraged to seek professional guidance based on their specific circumstances.
