On 12 December 2024, the Cyprus House of Representatives approved the implementation of a global minimum tax law in Cyprus (the GMT Law) for multinational enterprise groups (MNEs) and large domestic groups, aligning with the EU Pillar Two Directive 2022/2523 (Pillar 2 Directive). The GMT Law establishes a minimum effective tax rate of 15 per cent for MNEs with annual consolidated revenues exceeding €750 million. The GMT Law is currently in force as it was published in the Official Gazette of the Republic of Cyprus on 18 December 2024.
The GMT Law introduces the Income Inclusion Rule (IIR) effective from 2024 as well as the Under-Taxed Profits Rule (UTPR) and Domestic Minimum Top-Up Tax (DMTT) which will become effective in 2025. While Cyprus corporate income tax (CIT) remains unchanged, these new rules will apply alongside existing CIT for applicable groups, ensuring compliance with global tax reform standards.
MNEs within the scope of the GMT Law must notify the Cyprus Tax Department of their status within 15 months following the last day of the applicable fiscal year or 18 months with respect to the transition year (eg, for 2024 by 30 June 2026).
The GMT Law provides for penalties on late filings and payments, aligning with Cyprus' general tax compliance rules. However, no fines will be imposed for fiscal years ending before 30 June 2028, if the MNE can demonstrate that it took all the relevant steps to comply with the GMT Law.
The official text of the GMT Law (available only in Greek) can be found here and the Pillar 2 Directive can be accessed here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
