The Ministry of Finance of Cyprus has released the draft legislation, “The Safeguarding of a Global Minimum Level of Taxation of Multinational Enterprise Groups and Large-Scale Domestic Groups in the Union Law of 2023″. This draft legislation is aimed at the implementation of Pillar two global minimum tax rules in accordance with the Council Directive (EU) 2022/2523 of 14 December 2022.
The Ministry of Finance has prepared this bill in the context of harmonization with Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation of multinational enterprise groups and large-scale domestic groups in the Union, also known as Pillar Two. The proposed bill establishes a framework for imposing a minimum effective tax rate of 15% on multinational business groups or large-scale domestic entities with annual revenues exceeding €750 million.
The proposed legislation also aims to implement an income inclusion rule (IIR) and undertaxed profit rule (UTPR) for large multinational enterprises (MNEs) and domestic groups with annual consolidated revenues surpassing €750 million. Additionally, it aligns the Cyprus tax framework with the EU directive.
The proposed legislation does not modify the Cyprus income tax law. Instead, it aims to establish a supplementary framework of tax regulations to complement the existing corporate income tax and other applicable taxes for multinational enterprises within its scope.
