Cyprus’ tax reform has moved from design to implementation, shifting attention to how the new framework will affect competitiveness and investment appeal, according to Stavros Stavrou, president of the Cyprus Chamber of Commerce and Industry (Keve).

Speaking at the 9th Cyprus International Tax Conference, Cyprus Tax Reform 2026, he said the reform is expected to have a broadly positive economic impact, provided its effects are judged through real business conditions rather than headline figures.

Referring to the corporate tax increase, he said the market is still absorbing the change.

Cyprus has adjusted to similar developments in the past, he noted, although the impact differs across sectors. In his view, high-margin businesses may absorb it more easily, whereas lower-margin sectors such as agriculture and industry may need strategic reassessment.

However, he said Cyprus remains competitive despite comparisons with lower-tax jurisdictions.

From an operational perspective, he said he does not expect material changes in business models, supply chains or corporate presence. Instead, companies are likely to focus on efficiency improvements and pricing adjustments.

He then pointed to the abolition of dividend distribution accounting rules, describing it as a structural correction benefiting Cypriot shareholders.

According to Stavrou, the change reduces administrative burden, improves cash flow and lowers the effective tax burden for local investors, supporting domestic investment strategies.

In the same direction, he said the reduction in dividend taxation from 17 per cent to 5 per cent directly increases net returns for Cypriot tax residents and shareholders.

Turning to personal taxation, he said the changes are welcome but multiple deductions increase complexity. He questioned whether some measures could instead operate as subsidies to keep the system simpler.

On competitiveness, he said additional incentives will still be required, including higher thresholds and wider foreign tax credits, adding that differentiation must go beyond tax rates alone.

At the same time, he warned that assessment and record-keeping periods of up to seven years may increase uncertainty.

In closing, he said the reform balances compliance with international transparency rules and Pillar Two with preserving Cyprus’ investment attractiveness and removal of the tax-haven perception, while seeking balance between businesses and individuals, and local and international companies.

Finally, Stavrou said that “small businesses remain the backbone of the economy and competitiveness depends on regulatory burden as well as tax rates, adding the reform could also have addressed indirect taxation such as VAT.”