On Thursday, the House of Representatives unanimously approved the amending law on administrative cooperation in the field of taxation, bringing Cypriot legislation into line with a European directive that strengthens the automatic exchange of tax information among EU member states as part of the implementation of the global minimum corporate tax (Pillar 2).

The bill was passed unanimously with 51 votes in favor, after two amendments proposed by Yiannis Laouris, a member of the Direct Democracy party, were rejected.

The bill amends the Law on Administrative Cooperation in the Field of Taxation to incorporate Directive (EU) 2025/872, which establishes new rules for the exchange of information regarding supplementary tax returns filed by large multinational groups and large domestic business groups.

The new provisions introduce mandatory automatic exchange of relevant information among the tax authorities of Member States, as well as the use of a standardized form for the submission of reports by the entities subject to the requirement. At the same time, the reporting obligations are expanded for financial institutions, such as banks, investment firms, fund managers, and insurance companies that provide investment or pension products.

According to the Ministry of Finance, the new regulations are directly linked to the implementation of the so-called “Pillar 2” of the OECD, which establishes a minimum global tax rate of 15% for multinational groups and large domestic companies with consolidated revenue exceeding 750 million euros. The first supplementary tax returns were due by June 30, 2026.

The passage of the law was deemed urgent, as the Republic of Cyprus had not harmonized with the European directive by the deadline. The relevant deadline expired on December 31, 2025, and on March 30, 2026, the European Commission issued a reasoned opinion against Cyprus, calling on it to comply.

Following a revision of the original bill, the provision regarding administrative penalties was removed, so that the relevant obligations and penalties would be governed exclusively by the specific law implementing Pillar 2, while the provision regarding the use of information for other purposes was withdrawn to be reconsidered at a later stage.

During the debate in the Plenary, Direct Democracy MP Yiannis Laouris stated that his party would vote in favor of the bill, as it agrees with the final text following the removal of the provision for imposing administrative sanctions and the postponement of consideration of other provisions. He noted that Cyprus is currently subject to an infringement procedure by the European Union and stated that the two amendments he submitted do not affect the substance of the bill, but are intended to assist affected businesses by reducing bureaucracy and the administrative burden. Specifically, he proposed that administrative guidelines and answers to frequently asked questions be issued to facilitate the implementation of the legislation.

Christiana Erotokritou, Chair of the Parliamentary Committee on Finance and a Member of Parliament for the DIKO party, thanked the committee members for reviewing a highly technical and specialized billwhich, she said, ensures Cyprus’s compliance with both its European obligations and the OECD’s requirements for Pillar 2. He noted that the original text had included additional provisions from the Ministry of Finance, which were ultimately removed, so that the bill would be limited exclusively to the requirements of the European directive. He stated that DIKO would vote against the Laouris amendments, arguing that the issuance of guidelines and implementation manuals falls under the jurisdiction of the competent authorities and not the House of Representatives.

AKEL MP Aristos Damianou stated that his party would vote in favor of the bill, noting that during the debate, comments were made that improved the final text. He observed, however, that if there had been a more substantive dialogue with professional bodies beforehand, certain provisions could have been better worded. At the same time, he called on the competent authorities to effectively implement the new framework, particularly with regard to combating money laundering, describing the legislation as a useful tool for enhancing transparency and accountability.

ALMA President Odysseas Michaelides noted that the bill was submitted late, but he praised the work of the Parliamentary Committee on Finance, which worked intensively to complete its review in a timely manner. He added that the amendments do not add anything substantial, since the necessary guidance can be provided in other ways; for this reason, ALMA will vote in favor of the bill but not the amendments.

DISY MP Savia Orfanidou referred to yet another instance of a delayed submission of a harmonization bill, resulting in the Republic of Cyprus having already received a reasoned opinion from the European Commission. As she said, the Finance Committee has taken on the responsibility of expediting the review of the legislation due to the importance of compliance. He also noted that DISY is voting against the amendments, as the issue of how information is submitted is governed by other legislation and the Tax Department has already issued relevant administrative guidelines.

Source: CNA