The Cyprus House of Representatives reportedly approved the Law on a Global Minimum Level of Taxation for Multinational Enterprise Groups and Large-Scale Domestic Groups on 12 December 2024. This legislation implements Council Directive (EU) 2022/2523 of 14 December 2022, to enforce the Pillar Two global minimum tax framework.
This law includes the introduction of the Pillar Two income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to ensure a minimum corporate tax of 15% for large multinational (MNE) groups with annual consolidated revenue of at least EUR 750 million in at least two of the preceding four fiscal years. The rules apply to all domestic and international groups with a parent company or subsidiary in an EU member state. The bill also proposes implementing a qualified domestic minimum top-up tax (QDMTT) for members of in-scope groups and certain safe harbours.
The IIR takes effect for fiscal years starting on or after 1 January 2024, while the UTPR and QDMTT will apply to fiscal years beginning on or after 1 January 2025.
Earlier, the Cyprus Ministry of Finance announced that Cyprus agreed to all safe harbours and administrative guidance provided by the BEPS Inclusive Framework concerning the Pillar Two Global Minimum Tax (GloBE rules).
Cyprus has officially endorsed the Pillar Two framework in accordance with Article 32 of [Council Directive (EU) 2022/2523. Additionally, it has fully supported and approved the Safe Harbour rules detailed in the OECD Pillar Two guidance, published in December 2022, July 2023, December 2023, and June 2024.
