Approval of Bill: On December 12, 2024, Cyprus Parliament approved a bill to implement the EU Pillar Two Directive, ensuring a global minimum tax for multinational and large-scale domestic groups.

Effective Dates: The law takes effect for fiscal years starting on or after December 31, 2023.

Minimum Tax Rate: A minimum effective tax rate of 15% applies to entities in multinational enterprise groups or large-scale domestic groups with annual revenues over EUR 750 million.

Income Inclusion Rule (IIR): Effective from fiscal years starting on or after December 31, 2023.

Undertaxed Profits Rule (UTPR): Effective from fiscal years starting on or after December 31, 2024.

Domestic Top-Up Tax: Optional, effective from fiscal years starting on or after December 31, 2024.

Consistency with EU Directive: The law closely follows the EU Pillar Two Directive with some additions based on OECD guidance.

Future Amendments: Possible future amendments by the Ministry of Finance for additional clarifications.

Business Challenges: Businesses will face challenges in impact assessment, data collection, and compliance.

How we can assist: Our tax team is at your disposal to evaluate the applicability of Pillar Two to any particular Group as well as to assist with the tax impact and reporting requirements.