The House of Representatives is considering amendments to align its global minimum tax framework with EU and OECD Pillar Two requirements, introducing a recognised 15% Qualified Domestic Minimum Top-Up Tax (QDMTT) from fiscal year 2026, alongside revised rules for tax calculations, accounting standards, and currency elections.
The Cyprus House of Representatives is considering the Ensuring a Global Minimum Level of Taxation of Multinational Enterprise Groups and Large-Scale Domestic Groups in the Union (Amendment) Law of 2026, which was introduced during a plenary session on 8 October 2026.
This legislative measure updates the island’s corporate tax framework to ensure full alignment with EU Directive 2022/2523 and the OECD’s Pillar Two global minimum tax rules.
The updated framework addresses previous regulatory concerns by establishing standalone domestic charges, distinct accounting protocols, and specific currency guidelines for multinational corporations. Furthermore, the proposed legislation excludes foreign-controlled foreign company taxes from local calculations, requiring distinct effective tax rate evaluations.
Following detailed compliance reviews and recommendations from the European Commission and the OECD regarding Cyprus’s initial domestic tax mechanism (CyDMTT), the bill introduces a fully recognised Qualified Domestic Minimum Top-Up Tax (QDMTT) under Article 12A, effective from fiscal year 2026. Under this revised approach, the original CyDMTT applies exclusively to fiscal year 2025.
By establishing a compliant QDMTT, Cyprus enforces a 15% minimum effective tax rate on constituent entities of multinational enterprise (MNE) groups and large domestic groups with annual consolidated revenues exceeding EUR 750 million.
QDMTT priority, accounting standards and currency rules
Cyprus’s Qualified Domestic Minimum Top-up Tax (QDMTT) takes priority over foreign Income Inclusion Rules (IIR) and Undertaxed Profits Rules (UTPR), keeping top-up tax revenues in Cyprus. Foreign Controlled Foreign Company (CFC) taxes cannot be allocated to local entities for QDMTT calculations.
Entities must use EU-endorsed IFRS where local audited IFRS accounts are maintained or the Ultimate Parent Entity’s (UPE) accounting standard. Calculations default to euros, but groups may elect to use their presentation currency for renewable five-year periods.
Stakeholder impact & stakeholder input
Cyprus’s QDMTT aims to ensure top-up tax revenues are collected domestically rather than by foreign parent jurisdictions. Public consultations took place from July to September 2026, involving stakeholders including SELK, the Cyprus Banks Association, Tech Island, and the Cyprus Shipping Chamber.
Earlier, the Cyprus Ministry of Finance launched a public consultation on 30 July 2026 on amendments to the Global Minimum Tax Law, following European Commission observations on the transposition of the EU Pillar Two Directive.
