Cyprus Tax Department published list of low-tax jurisdictions

The Cyprus Tax Department has published Circular 1/2026 on 09/04/2026, which determines the jurisdictions to be treated as “low-tax jurisdictions” for the year 2026,  for the purposes of s.11(17) of the Cyprus Income Tax Law and 391)(d)(i)(aa) of the Special Contribution for the Defence Law under which:

a) Interest and royalty payments to in-scope recipients that are tax residents and/or organised and/or established in low-tax jurisdictions shall not be allowed as deductions from the payer’s taxable income; and

b) Dividend payments to in-scope recipients shall be subject to a withholding tax of 5%.

Further details on the in-scope recipients and the application of the defensive measures can be found on our dedicated webpage.

The provisions of the defensive measures for tax year 2026, as per the newly issued circular will apply to payments made to the following jurisdictions:

The Circular stresses that the determination of the applicable tax-rate, for the purposes of determining the list of low-tax jurisdictions, has been carried out on the basis of criteria that shall be assessed and adjusted annually.

The defensive measures applicable to EU blacklisted jurisdictions shall apply to Anguilla and Vanuatu for as long as these jurisdictions remain on the EU blacklist.