20th December 2025 – 26th December 2025
LOCAL NEWS
1. CYPRUS TAX REFORM, EFFECTIVE FROM 1ST JANUARY 2026
On the 22nd December 2025, the Cyprus House of Representatives passed the bills regarding the Cyprus Tax Reform Package, voting through five of the six bills submitted by the government following a two-year consultation process, with changes taking effect on 1st January 2026.
INCREASE OF COPRORATE TAX
As a result of the reform, the corporate tax rate will rise from 12.5% to 15%, however, businesses will benefit from the complete abolition of the deemed dividend distribution system and a sharp cut in withholding tax on actual dividend payments. Stamp duty will be eliminated entirely, exemptions for capital gains tax will increase, and stock options will receive favourable treatment.
It is considered that, through targeted interventions, the following was achieved:
- the balancing of collection measures with clear limits and judicial control, protecting healthy businesses,
- the avoidance of regulations that would cause uncertainty in the functioning of boards of directors and the philosophy of headquartering,
- the maintenance of incentives that enhance extroversion and the attraction of investments.
In particular:
DIVIDENDS
The deemed dividend distributions for profits earned after 2026 is abolished, and the special defence contribution on actual dividends is reduced from 17 per cent to a flat 5 per cent. However, for the years 2024 and 2025 the old taxation will apply until they are paid in full. Specifically, there is a provision in the bill that if in any period of six years after January 1, 2026, a dividend is paid from the profits of 2024 or 2025, then it will be taxed at 17%.
Stamp duties on most transactions are abolished and a flat 8 per cent tax is introduced for gains from cryptocurrency disposals and approved stock options.
Regulations were also passed on the taxation of interest and income of non-residents.
Other key changes that affect Companies are the following:
a) Improvement to the deduction and expenditure reforms
The maximum deduction for entertainment expenses is increased from €17,086 to €30,000.
Initial listing costs on a recognised stock exchange are now deductible up to €300,000, with unused amounts carried forward for up to three years under a de minimis aid framework.
b) Transfer Pricing and Cross-Border Rules
To simplify compliance and reduce administrative burden, the thresholds for exemption from keeping a Transfer Pricing Documentation Record in Cyprus have been significantly increased:
Financial transactions: €10 million
Purchase/sale of goods: €5 million
Other transactions: €2.5 million.
In addition, the anti-tax avoidance amendments clarify that:
- Interest deductions for the acquisition of 100% owned subsidiaries are abolished (with a transitional relief until 2027 for investments made before 31 December 2025).
- Profits of permanent establishments (PEs) located in non-cooperative jurisdictions are no longer exempt from income tax in Cyprus.
- Legal entities incorporated or registered in Cyprus are considered tax residents of Cyprus, codifying an existing practice.
c) Loss carry-forward
The reform extends the tax loss carry-forward period from five to seven years. This change will benefit capital-intensive and cyclical sectors, where losses may not be fully absorbed within a shorter time frame.
d) Compliance and Administrative Services Upgrades
The reform also modernizes the administrative framework:
- The deadline for filing and paying the company tax return was moved to 31 January of the following year.
- Mandatory employer declarations for all employees, regardless of income.
- Digital archiving, extended data retention (8 years) and enhanced powers of the Tax Commissioner for audits.
- Introduction of a general anti-abuse rule to combat aggressive tax planning;
- Updated administrative fines to encourage voluntary compliance.
Together, these measures aim to strengthen enforcement, simplify reporting and align Cyprus' tax administration with modern EU and OECD frameworks.
TAX AUTHORITIES
It should also be noted that applying as of 1st January 2025, the coming changes grant new, broader powers to the Tax Commissioner to combat tax evasion, including the authority to seal non-compliant businesses and demand banking records.
Tax authorities are afforded new tools to freeze assets and corporate shares in the case of major tax arrears. And filing tax returns will be mandatory on the vast majority of the population that is gainfully employed.
Key elements in relation to the Tax Department include:
i. The Department of Taxation gains expanded powers to obtain financial information quickly, impose graduated penalties and intervene earlier in cases of non-compliance.
Legal experts express their concerns and reservations regarding the expansion of powers granted to the Tax Commissioner. Measures such as the suspension of business operations, interference with rent payments, corporate deregistration, share seizure, and cancellation of property transfers pose significant risks.
By bypassing judicial oversight, these measures concentrate excessive authority within the Commissioner's office, enabling direct intervention in commercial activity. Such powers are not suitable for a "one‑size‑fits‑all" application and are likely to generate procedural complexity, legal uncertainty, and operational disruption.
Administrative delays, outstanding filings, or minor tax arrears should not justify the freezing or closure of otherwise viable businesses. In many cases, such issues arise from internal processes or external factors rather than deliberate non‑compliance. Also, what happens in situations when such filings or penalties are oversights of the actual income tax office. Such measures are simply not practical.
ii. All individuals aged 25 to 71 must file a tax return regardless of income.
iii. Mandatory electronic payment for rents above €500
iv. Access to bank data on interest credited to accounts, including tax residence and identification details.
v. Expanded investigative powers
The Tax Commissioner receives significantly enhanced powers, including authority to:
Request detailed asset and liability statements for a period of six years.
Obtain banking records from Cyprus-based financial institutions.
Seal business premises in cases of persistent non-compliance, such as failure to file returns, issue lawful receipts or settle assessed tax liabilities.
Taxpayers retain the right to challenge such actions before the courts, and it is expected that case law will develop around the proportionality and procedural safeguards associated with these powers.
vi. The power to freeze company shares for tax debts above €100,000.
Where tax debts exceed 100,000 euro, the authorities may impose a freeze on company shares, effectively preventing transfers until the liability is resolved.
vii. Collection through third parties such as employers or banks when liabilities are overdue.
Speaking after the vote, Finance Minister Makis Keravnos said the new framework will lead the country’s economy to continued growth, improve competitiveness and effective support for Cypriot households in the coming years.
CONCLUSION
Careful analysis of the amending laws and subsequent circulars from the Tax Department will be essential in the coming months. Transitional rules and sector-specific guidance are likely to play a decisive role in determining the real-world impact of the reform.
As stated about, the changes to the Tax regime align Cyprus with the OECD framework, which allows us to re – enter agreements and double tax treaties with other countries which have remained stagnant.
Our Union in coordination with the Shipping Deputy Ministry will proceed with all the necessary actions and communicate with the Ministries of Foreign Affairs and Finance to promote and encourage the materialization of double tax treaties between Cyprus and OECD compliant countries.
Related Articles
Tax reform: What changes for individuals and businesses in Cyprus | in-cyprus.com
Alexey Gubarev: The new tax rates increase Cyprus' competitiveness as an investment destination
House approves tax reform bills | Cyprus Mail
Cyprus Unveils New Tax Framework from 2026
2026 Cyprus Tax Reform – Three Key Areas Of Concern - Tax Authorities - Cyprus
Φορολογική μεταρρύθμιση: Τι αλλάζει αναλυτικά από την 1η Ιανουαρίου 2026 | NOMISMA
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INTERNATIONAL NEWS
2. Council extends economic sanctions against Russia for a further 6 months
On Monday, 22nd December 2025, the European Council renewed the EU restrictive measures against Russia for a further 6 months, until 31 July 2026.
These economic measures currently consist of a broad spectrum of sectoral measures, including restrictions on trade, finance, energy, technology and dual-use goods, industry, transport and luxury goods. They also cover: a ban on the import or transfer of seaborne crude oil and certain petroleum products from Russia to the EU, a de-SWIFTing of several Russian banks and the suspension of the broadcasting activities and licenses in the European Union of several Kremlin-backed disinformation outlets. Additionally, specific measures enable the EU to counter sanctions circumvention.
Related Articles
3. Ukraine hits Russian tanker in Mediterranean Sea for first time, Russia escalates attacks on Ukraine’s Odessa port – Safety of vessels in the Black Sea
On the 19th December 2025, Ukraine stated it has attacked a Russian “shadow fleet” tanker with aerial drones 1,250 miles (2,000km) from its borders, in the first such strike in the neutral waters of the Mediterranean Sea since the beginning of the Ukraine – Russia war nearly four years ago. The strike represents a major expansion of Ukraine's campaign against Russian energy infrastructure, which previously focused on land-based targets such as refineries and oil rigs. In recent weeks, Ukraine has widened its operations to maritime targets across multiple seas.
Ukraine claimed that "Russia used this tanker to circumvent sanctions and earn money that went to the war against Ukraine. Therefore, from the point of view of international law and the laws and customs of war, this is an absolutely legitimate target for the SBU”. However, it is disputed whether Ukraine can legitimise this sort of operation.
Russian President Vladimir Putin claimed the attack would not disrupt supplies, but vowed that the Kremlin's forces would still retaliate. During the annual end of year press conference, President Putin said that Russia would respond to recent Ukrainian attacks on shadow fleet tankers. The Russian President has previously threatened to sever Ukraine’s access to the Black Sea in response to the attacks on tankers.
Partly in retaliation for Kyiv’s recent drone attacks on Russia’s sanctions-evading “shadow fleet” of vessels, on Saturday, 20th December 2025, Russian forces hit the port of Pivdennyi near Odesa damaged storage reservoirs.
On Monday, 22nd December 2025, Russian forces struck Ukraine's Black Sea port of Odessa and damaged port facilities and a ship,
"Russia is attempting to disrupt maritime logistics by launching systematic attacks on port and energy infrastructure," Deputy Prime Minister Oleksiy Kuleba said on the Telegram app. "Last night, ports and energy facilities were targeted again."
“Russia is once again trying to restrict Ukraine's access to the sea and block our coastal regions," Ukrainian President Zelenskiy told reporters in Kyiv.
Ufuk Teker, General Manager of Türk P&I Insurance, stated that the current situation in the Black Sea is not sustainable for marine insurance: “Ships are either sinking or suffering major damage continuously. The risk has grown too large and has started to exceed manageable levels for insurers.”
Turkish Defence Minister Yaşar Güler said during parliamentary discussions that Turkey is taking additional measures to ensure the safety of maritime navigation in the Black Sea amid recent attacks on commercial vessels. According to Güler, the Black Sea region continues to pose a high level of risk, prompting Turkey to intensify its efforts at both national and multinational levels to safeguard shipping lanes and address the threat posed by naval mines. “We are resolutely continuing our work to ensure maritime security and eliminate mine threats in the Black Sea, strictly in line with the Montreux Convention.”
Güler noted that Ankara is issuing warnings and notifications to relevant parties in an effort to halt attacks that threaten the safety of navigation within Turkey’s exclusive economic zone in the Black Sea.
Related Articles
Ukraine attacks Russian ‘shadow’ tanker off Libyan coast | Ukraine | The Guardian
Ukraine 'hits Russian tanker in Mediterranean Sea for first time' | World News | Sky News
Ukraine strikes Russian shadow fleet tanker in Mediterranean | Euronews
BBC Verify: Ukraine video claims to show long-range attack on oil tanker in Mediterranean - BBC News
Ukraine strikes Russian shadow fleet tanker in Mediterranean for first time – POLITICO
Why is Russia escalating attacks on Ukraine’s Odesa? | Russia-Ukraine war News | Al Jazeera
Russia escalates attacks on key Ukrainian region of Odesa
Escalating Russian airstrikes aim to cut Ukraine off from sea, Zelenskiy says | Reuters
Danger of Uninsured Ships in the Black Sea
Türkiye Boosts Black Sea Security Amid Maritime Threats - RestProperty
How the Ukraine war is increasingly threatening Black Sea security - TRT World
Turkey warns Russia and Ukraine over Black Sea security after shooting down drone | eKathimerini.com
4. Trump unveils plans for 'Golden Fleet' battleships amidst tensions with Venezuela and in the Black Sea and US continuing to seize oil tankers off the coast of Venezuela
On Monday, 22nd December 2025, United States President Donald Trump announced plans to commission a new series of heavily armed Navy "battleships" named after himself, as part of a revamped "Golden Fleet".
The announcement is part of a larger planned expansion of the US Navy by President Trump in both manned and unmanned vessels, including larger missile-armed warships and smaller vessels. Officials have warned that the US currently lags behind China in both shipbuilding capacity and total output.
Since returning to office in January, Trump has vowed to revive the US shipbuilding industry. "We used to make so many ships," Trump said in March. "We don't make them very much, but we're going to make them very fast, very soon. It will have a huge impact." Trump downplayed the idea that the new ships were meant to counter any particular country, saying that they were “a counter to everybody”.
The president's announcement also comes as tension escalated in the Black Sea and US naval and air assets have surged to the Caribbean amid rising tensions with Venezuela.
The US started attacking vessels in September that were alleged to be carrying drugs, with strikes leaving at least 100 people dead. Speaking to reporters on Monday, 22nd December 2025, Trump claimed that thousands of American lives had been saved because of the boat strikes by stopping lethal drugs from entering the US. The attacks have been criticised by some experts, who said they could violate international laws governing armed conflict.
Furthermore, the United States recently intercepted an oil tanker off Venezuela’s coast in international waters, marking the second U.S. action against tankers near Venezuela in recent weeks amid a significant military buildup in the region. The seizure comes shortly after President Trump announced a “total and complete blockade” of all sanctioned Venezuelan oil tankers.
The tanker was part of Venezuela’s so-called “shadow fleet,” vessels often using false identities to evade sanctions while transporting crude, largely to China. While some tankers are sanctioned, others are not.
Related Articles
Donald Trump unveils new class of battleships named after himself
US intercepts another tanker off Venezuela's coast - SAFETY4SEA
5. European Commission launches consultation on the 15th update of the EU-approved ship recycling facilities list – NGO urges the EU to remove all Turkish yards
The European Commission launched its long-awaited consultation on the 15th update of the European List of ship recycling facilities.
On the 23rd December 2025, the NGO Shipbreaking Platform published a Press Release urging the EU to remove all Turkish yards using the landing method, continue excluding Indian beaching yards, and invest in recycling capacity aligned with circularity and decarbonization goals.
According to NGO, while the removal of the Dörtel yard in Turkey, due to unsafe dismantling practices and lack of pollution containment, is welcomed, it is considered an insufficient response to widespread ongoing violations, since serious safety and environmental concerns persist, including recent worker fatalities at EU-approved Turkish yards. The NGO warns that approving facilities outside the EU that would not meet EU standards creates a damaging double standard.
The Platform rejects claims that EU facilities lack capacity, arguing the real issue is a lack of ship supply, not technical limitations.
Related Articles
NGO Shipbreaking Platform pushes the EU for sustainable ship recycling - SAFETY4SEA
6. US TREASURY REPORT
The US Treasury Report for all actions reported is hereby attached.
Related Article:
Attachment 1: US Treasury Report for week 20/12/2025- 26/12/2025
7. PIRACY REPORT
The WTS Report has not been made available yet.
Nothing important to report from the ILO and the House of Representatives.
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