The Cyprus Tax Department has issued Circular 1/2026 (dated 9 April 2026), publishing the official list of jurisdictions classified as low-tax for the year 2026, for the purposes of the provisions of Article 11(17) of the Income Tax Law and Article 3(1)(δ)(i)(αα) of the Special Defence Contribution Law.
What Is a Low-Tax Jurisdiction?
A low-tax jurisdiction is defined as any third country with a corporate tax rate below 50% of the Cyprus corporate income tax rate. With the Cyprus CIT rate at 15% (effective 1 January 2026), the threshold is 7.5%. Any jurisdiction with a corporate tax rate below 7.5% is classified as a low-tax jurisdiction.
Key Provisions
As stated in paragraph 2 of the circular, subject to paragraph 4, the following provisions apply for 2026:
- The provisions of Article 11(17) of the Income Tax Law regarding the non-deductibility from the taxable income of a Cyprus-resident company of interest and royalty payments; and
- The provisions of Article 3(1)(δ)(i)(αα) of the Special Defence Contribution Law regarding the payment (through withholding) of SDC contribution on dividends at a rate of 5%.
The List for 2026
The jurisdictions classified as low-tax for 2026 are:
- Anguilla
- Vanuatu
- Bermuda
- British Virgin Islands
- Guernsey
- Cayman Islands
- Turks and Caicos Islands
- Isle of Man
- Bahamas
- Bahrain
- Jersey
The circular notes that Anguilla and Vanuatu are included for the first time, following their latest assessment by the OECD Global Forum.
The Tax Department further notes that the assessment of jurisdictions for the purposes of determining low-tax compliance will be carried out on an annual basis, and the list will be updated accordingly.
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Disclaimer: Above announcement is for informational purposes only and should not be taken as tax advise. If you have any queries contact us or a professional advisor you cooperate with.
