Nicosia may slash some VAT rates

Nicosia may slash some VAT rates

Cyprus’ finance minister, Makis Keravnos, said that the ministry is considering reducing the value-added tax (VAT) for basic necessities to tackle high prices.

The minister stated that all European countries, including Cyprus, are facing the serious problem of inflation and rising interest rates by the European Central Bank, which is causing financial difficulties, especially among middle-income groups and borrowers, particularly young couples, who are constructing or purchasing their primary residence.

The ministry is also considering reducing VAT in some cases based on a new directive from the European Commission that allows for such actions. This may involve lowering VAT rates or even reducing them to 0% for specific categories of basic everyday products such as milk, baby food and diapers. The minister expects to finalize the decision on VAT categorization for specific products within the next few days as part of the government’s policy to tackle high prices.

Asked about the level of reduced VAT rates, Keravnos explained that there are different categories, some of which can be reduced up to 5% and some up to 0%.

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