Despite drop in peak inflation, government extends for second time VAT cut on essentials until 30 June 2024
The Cypriot Council of Ministers has now approved a two-month extension to the temporary reduction in the reduced 5% and standard 19% rates on certain essential goods. The rate cut was due to end on 30 April 2024. This is the second delay in returning the VAT rate – the last was in October 2023.
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;
- eggs; and
- baby food.
19% to 5%:
- detergents,
- fabric softeners,
- toilet paper,
- baby diapers,
- cleaning supplies; and
- adult diapers.
