Abstract

This study aims to analyze and compare the corporate tax systems of Greece and Cyprus, focusing on data from 2018 to 2022. Research is conducted to examine the factors affecting income taxes in Greek and Cypriot companies during this period. The study evaluates the effective tax rates (ETRs) for corporate income by analyzing the financial statements of companies in each country and comparing these rates with the statutory tax rates (STRs). When the ETR of companies is significantly lower than the STR of the country, these companies receive preferential treatment, resulting in reduced tax payments according to the STRs law of the country. The study also investigates whether certain fundamental characteristics of the companies decisively influence the actual tax rates to which they are subject, as well as whether this effect varies between the two countries.  Our results reveal distinct differences in tax policies between Greece and Cyprus, with Cyprus showing a greater tendency to provide tax relief to businesses. A comparative analysis is also conducted between two companies in the petroleum sector of Greece and Cyprus. A financial analysis of the two companies is performed based on specific financial indicators to investigate whether these indicators are influenced by the tax regime of each country, using key financial ratios for the period from 2020 to 2022. The analysis of Greece’s asset efficiency ratio indicates that changes in income tax rates impact financial performance: a reduction in tax rates correlates with increased profitability, higher dividend distributions, and enhanced capital reinvestment. Consequently, the Greek government benefits from higher revenue due to increased sales and overall business activity.

Key words: Income taxation, corporate, effective tax rate, accounting, tax accounting, petroleum, industry.