Cyprus may raise its corporation tax from 10% to 12.5 % as part of a bailout deal with the European Union and the International Monetary Fund.  Christopher Pissarides, the head of Cyprus's new Economic Policy Council and the winner of the Nobel Prize in Economics in 2010, emphasized that that the rate must not increase for at least a decade.

Cyprus is seeking EUR17bn to recapitalize its banks and has already implemented a number of tax increases, including a 2% rise in VAT to 17%.  Cyprus applied for a bailout in June 2012 and is the fifth European country to do so since 2010.