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The Cyprus Ministry of Finance (MoF) opened on 3 October, a public consultation on Cyprus’ transposition into its national law of the EU Directive aimed at ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups (the Directive) dated 14 December 2022. The Directive itself was developed from the OECD/G20 Inclusive Framework on BEPS Pillar Two Model Rules (the Model Rules). The public consultation invites comments from interested parties until 31 October 2023. 

The MoF has published the text of a draft bill (the Draft Bill) in Greek. The text of the Draft Bill generally aligns with the Directive, and includes additional text to account for certain elements of the OECD/G20 Inclusive Framework on BEPS Administrative Guidance (AG) that has been released to date. The Draft Bill also includes administrative provisions, which outside of the OECD’s GloBE Information Return are determined on a per-country basis.

Observation: The adoption of the Draft Bill would not modify Cyprus’ corporate income tax (CIT) legislation. Instead, the Draft Bill would introduce additional tax legislation to be applied subsequently to the application of CIT and other relevant taxes. 

The Draft Bill would introduce a Qualified Income Inclusion Rule (QIIR), effective in 2024; a Qualified Undertaxed Payments Rule (QUTPR), effective in 2025; and a Cyprus domestic minimum top-up tax, effective in 2025.