Legislation to impose a minimum tax rate of 15% on large multinational enterprises with an annual turnover of €750 million is ready for implementation.
This harmonisation bill transposes the European directive, which Cyprus was required to implement by the beginning of this year. In fact, due to delays, the European Commission previously sent a reasoned opinion to Cyprus, calling for the directive to be transposed into its national law.
Essentially, the directive puts an end to tax practices that allow multinational companies to shift their profits to jurisdictions with zero or very low tax rates.
A source from the Ministry of Finance, speaking to philenews, confirmed that the legislation is ready. They stated that the Law Office has completed its legislative review and the bill has been forwarded to the Council of Ministers.
It was also noted that the bill has been evaluated and includes the input of stakeholders who provided feedback during the public consultation process.
Moreover, a government source indicated that the bill will be presented to the Council of Ministers for approval in the upcoming sessions. Subsequently, it will be tabled in Parliament and discussed by the Parliamentary Committee on Financial Affairs.
According to our information, the competent ministry will request the Committee to consider the bill as a matter of priority to avoid potential repercussions, which may entail financial costs.
As is known, the next step after the reasoned opinion from the European Commission is the referral of Cyprus to the Court of Justice of the European Union (CJEU).
Authorities have already informed the EU that the bill will be soon presented to Parliament, assuring that it will be approved in the coming weeks. The decision to impose a minimum corporate tax rate of 15% on multinationals with an annual turnover of €750 million was made in December 2022 by the leaders of the EU member states.
According to the EU, the minimum effective taxation formalises the implementation by the EU of the so-called ‘Pillar 2’ rules, which were agreed upon in 2021 as part of the global agreement on international tax reform.
The European directive is aligned with the global standards adopted by the Organisation for Economic Co-operation and Development (OECD) and endorsed by the G20 leaders.
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