15.07.2022
The Cypriot Parliament, by 50 votes in favor and one abstention, approved into law two bills of amendments aimed at expanding the framework for attracting companies to Cyprus.
With the approval of these two laws, the package of tax measures included in the Strategy for attracting businesses to increase and/or expand their activities in Cyprus, approved by the Council of Ministers, has been completed.
The Plenary approved an amendment to the Income Tax Law, expanding the scope of the existing base of exemption from income tax in the amount of 50% of the salary of a person working in the Republic, if before employment he was a non-resident.
According to the permanent secretary of the Ministry of Finance, the expansion of the tax deduction was promoted in the context of implementing a strategy to attract companies to work or expand their activities in the republic in order to create jobs with high added value, expand the production base and develop the economy.
In particular, the bill provides for an exemption from income tax for a period of 17 years of 50% of the remuneration of new employees whose first labor activity in the republic began on January 1, 2022, provided that their annual remuneration exceeds 55,000 euros . and have not been residents of the Republic for at least 12 consecutive years prior to starting work in the Republic.
It is expected that the agreements will make the tax base for hiring people from abroad more attractive, stimulate the operation of enterprises in the Republic with a physical presence, the transfer of their headquarters and staff to Cyprus, the repatriation of Cypriots permanently residing abroad for a long period and attracting republic of a high standard of living of skilled foreign workers.
The Plenum also approved an amendment to the Income Tax Law expanding the existing tax base for investments in innovative businesses to include investments made by legal entities.
With the proposed amendments, 30% of the costs incurred to invest equity capital by a legal entity in approved small and medium innovative enterprises will be deductible from taxable income, provided that the benefit from deductible expenses does not exceed 50% of the total taxable income of a person with a maximum amount of 150,000 euros .
