G7 tax deal may not impact Cyprus

A decision by the G7 to impose a global minimum tax rate appears not to affect Cyprus’ competitive corporate regime, Finance Minister Constantinos Petrides said.

In a written comment to Reuters, Petrides said Cyprus would safeguard its interests and those of smaller EU member states needed to be acknowledged and taken into consideration.

The G7 has proposed a global minimum tax rate of 15%.

Cyprus’ tax rate is 12.5%, but Petrides said its effective taxation was higher than 15%.

“The G7 decision is indeed a breakthrough, which, however, does not seem to directly affect Cyprus,” Petrides said, arguing the island was “not a tax haven”.

“Cyprus is an open economy and a competitive destination, based on its own merits, and will exhibit a constructive spirit at the discussions at EU level,” he said.

“At the same time (it) will safeguard its interests and the sustainability of the economy. The small EU member states’ interests should be acknowledged and taken into consideration.”

Petrides had told European lawmakers last week that the island believed taxation was a matter of national competence.

Cyprus was last forced to review its tax regime in 2013 when it raised the threshold to 12.5% from 10% under the terms of an international financial bailout.

Cyprus and Ireland have the lowest corporate tax rates in the EU at 12.5%, and both countries have framed the debate as one of national sovereignty.

The United States, Britain and other large, rich nations reached a landmark deal on Saturday to back a minimum global corporate tax rate of at least 15% to squeeze more money out of multinationals such as Amazon or Google.