[World Tax News] Australia R&D Tax Changes and Global Updates

Editorial Team – [2026] 184 taxmann.com 565 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week:

1. Australia Proposes the Exclusion of Tobacco and Gambling Activities from the R&D Tax Incentive

The Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026 was introduced and received its first reading in the Australian House of Representatives on 25 March 2026. A key proposal under the Bill seeks to amend the Income Tax Assessment Act 1997 (ITAA 1997) to exclude research and development (R&D) activities associated with tobacco and gambling from eligibility under the R&D Tax Incentive.

This exclusion is proposed to apply to income years commencing on or after 1 July 2025. However, an exception has been made for the activities undertaken exclusively for harm minimisation purposes. The scope of the exclusion extends to activities involving tobacco products, nicotine products, and vaping goods, as well as those connected with gambling services, gambling, and similar practices.

Source – Treasury Laws Amendment (Delivering an Efficient and Trusted Tax System) Bill 2026

2. Cyprus Introduces 25% Tax Exemption Incentive for Returning Non-resident Individuals

Cyprus has introduced a new tax incentive granting a 25% exemption to non-resident individuals who return to Cyprus to take up employment or commence a self-employed business. This measure has been enacted through Law No. 17(I) of 2026, published in the Official Gazette on 6 March 2026, and is deemed to have come into force retrospectively from 1 January 2025.

Under this incentive, 25% of annual employment or business income is exempt from tax, subject to a maximum exemption of EUR 25,000 per annum. To be eligible, individuals must have been non-residents for a minimum of seven consecutive years, must have previously qualified as Cyprus tax residents, and must satisfy specified full-time employment abroad conditions.

The employment abroad requirement mandates that the individual must have been employed outside Cyprus by a non-resident employer for at least:

• 36 out of the 84 months immediately preceding the month in which employment or business activities commence in Cyprus, in the case of individuals holding a university degree; and
• 84 months immediately preceding such month, in the case of individuals not holding a university degree.

The exemption is available from the year in which employment or business activity begins in Cyprus and for the subsequent six years, provided such activity commences on or after 1 January 2025 and up to and including 2030. Additionally, the exemption applies only where the annual employment or business income exceeds EUR 30,000.

Source – Official Gazette

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