Keravnos says no evidence of corporate departures over global minimum tax

Nicosia, Cyprus. Cyprus has seen no evidence that large companies are leaving because of the global minimum tax, Finance Minister Makis Keravnos said this week, rejecting reports of an impending corporate exodus as unfounded.

He said the government had no information or indication that more than 2,000 foreign parent and subsidiary companies in Cyprus were preparing to leave or relocate elsewhere in the European Union.

Pillar Two framework

Speaking at the Finance Ministry, Keravnos addressed concerns over Pillar Two, the global minimum tax framework developed through the Organisation for Economic Co-operation and Development and the G20.

He said claims that the rules were pushing major businesses away from Cyprus had come from “isolated voices which, if they do not serve personal interests, seem to arise from some obsessions”.

Keravnos said Pillar Two was not introduced by Cyprus alone but formed part of an international agreement reached through the OECD, G20 and EU on global minimum taxation, which has since been incorporated into EU law.

Scope of the rules

The finance minister said the framework does not impose a 15 per cent tax on every company operating in Cyprus. It applies only to large multinational and domestic groups with annual revenue exceeding €750 million.

He added that companies within that category do not automatically pay additional tax at a flat rate of 15 per cent. Where a group’s effective tax rate is below 15 per cent, the difference to the minimum level is paid through specific and complex rules, he said.

Amending bill

Keravnos said the Finance Ministry was preparing an amending bill following a decision by the European Commission, describing it as a standard process arising from consultations with Brussels and Cyprus’ obligations under the OECD framework.

He said there were no objective reasons for companies to leave, adding that Cyprus continued to have a competitive tax environment.

Cyprus’ strategic position was also gaining importance because of political and economic shifts, he said, referring in particular to the planned India-Middle East-Europe Economic Corridor.