Despite drop in peak inflation, government extends for fifth time VAT cut on essentials until 31 December 2026
The Cypriot Finance Department has approved a further twelve-month extension to the temporary reduction in the reduced 5% to 0% on certain essential goods.
The rate cut was to expire on 31 December 2025. This is the fifth 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. 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.
