Cyprus businesses are on high alert as company accounting departments work intensively to adapt payroll systems to tax reform changes before month-end salary payments, with several issues still requiring clarification and causing delays.
The tax reform approval has created new conditions for both companies and employees, forcing accounting departments to adjust payroll for workers to new realities, including deductions, tax-free allowances and new forms by the end of January when next payments are due.
The changes are so numerous that questions inevitably arise requiring clarification. Recognising this, the Cyprus Employers and Industrialists Federation (OEB) is holding a two-day briefing for member businesses in cooperation with the Tax Commissioner’s office.
OEB Director General Michalis Antoniou said a race against time has begun to inform employers promptly to correctly implement the tax changes.
The OEB and the Tax Commissioner’s office will hold webinars titled “Tax Changes in Individual Taxation” to present changes from the recent tax reform affecting individual taxation, specifically the tax deduction declaration form T.F. 59 for the 2026 tax year.
The webinars are aimed mainly at company staff with payroll management responsibilities, with more than one person per company able to attend. To accommodate all interested parties, the OEB said the webinars will be held with identical content on two dates via Zoom: Thursday 15 January 2026 from 09:00 to 11:00 and Friday 16 January 2026 from 09:00 to 11:00.
The OEB and Tax Commissioner’s office will schedule briefing presentations on other tax reform changes affecting business activities at a later stage.
Following a Finance Ministry circular yesterday, the OEB and Cyprus Chamber of Commerce and Industry (KEVE) informed members about changes to the cost-of-living adjustment (COLA).
The Consumer Price Index (excluding consumption taxes) for 2025 recorded a 0.13% increase. Under the Permanent Agreement signed between Social Partners on 13 November 2025, salaries will be adjusted on 1 January 2026 by 80% of the annual Index increase, provided the previous year showed positive growth.
The agreement also provides that on 1 July 2026, salaries will be adjusted by an additional 10% of the annual Index increase, bringing the total to 90%.
Consequently, COLA from 1 January 2026 increases by 0.10% on total salaries valid on 31 December 2025, or from 12.56% to 12.67% on basic salaries. From 1 July 2026, these percentages change to 0.12% (an additional 0.02% on total salaries valid on 31 December 2025) or 12.70% (an additional 0.03% on basic salaries).
The OEB provided specific examples: For a total salary of €1,500 on 31 December 2025, the COLA allowance will be €1.50 for the first six months of 2026, rising to €1.80 from July for the following 12 months. For a basic salary of €1,500 on 1 January 2026, the 12.67% COLA means an increase of €190.05 for the first six months, rising to €190.50 for the next 12 months.
The OEB noted these examples exclude any general increases or increments granted during the period 2018-2025.