Despite drop in peak inflation, government extends for fourth time VAT cut on essentials until 31 December 2025
The Cypriot Tax Department has approved a further three-month extension to the temporary reduction in the reduced 5% to 0% on certain essential goods. The rate cut had already expired on 30 September 2024. This is the fourth delay in returning the VAT rate – the last was in July 2023.
The initiative aims to support consumers by reducing the cost burden on essential goods amid ongoing economic challenges in Cyprus.
Cypriot inflation has now come off the 10.6% peak from July last year, and is now just 1.5% in July 2023. However, persistent rises on food – still at over 20% – has prompted the government to rollover zero-rating of certain essentials.
Other European inflation VAT cuts are common following inflationary disruptions to supply chains and the Russian invasion of Ukraine.
Goods subject to the cut include:
5% to zero:
- milk;
- bread;
- coffee;
- sugar;
- meat;
- vegetables;
- eggs; and
- baby food.
