Cyprus is actively developing the potential of significant natural gas deposits discovered in its Exclusive Economic Zone and coordinating with neighbouring countries to plan for their most efficient exploitation.

Preliminary reserves have been assessed by RBS between 300% and 3000% of GDP and the US Geological Survey estimates that there could be 120 trillion cubic feet of gas in the Levant basin, which borders Israel, Lebanon, Syria and Cyprus.

The Cypriot government anticipates to have the setup in place by 2018 and to start trading natural gas by 2019. It has completed the sale of oil and gas licenses for five blocks in its exclusive economic zone and has received about €180 million in signature bonuses from bids to explore.

According to the final Memorandum of Understanding, on the basis that the Cypriot government will undertake all necessary actions, the planned tax measures to apply for the period up to 2016 are the following:
  • Increase in the statutory corporate income tax rate from 10% to 12.5%
  • Increase in the Special Defence Contribution rate on interest income from deposits from 15% to 30%. (Non-Cyprus resident persons are exempt)
  • Increase in Property Tax on land and buildings situated in Cyprus
  • Increase of the special levy payable by banks from 0.11% to 0.15%
  • Increase taxes on motor vehicles (road tax, registration fee, excise duties)