Nicosia to expand list with 0% VAT
Almost two weeks after the zeroing of the tax rate on seven products (bread, eggs, milk, baby diapers, baby food, feminine hygiene products, and adult diapers) in Cyprus, the island’s ministries of Finance and of Commerce are in discussions regarding the next list of products that will have a low or reduced tax rate.
Sources say there may be developments and possible announcements on the matter within June. However, the timeline depends not only on Nicosia’s decision but also on the European Commission, which needs to give its approval if the selected products do not fall into the low-tax category and are not considered essential goods.
The prevailing scenario is that the chosen products will have a 5% tax rate, such as dairy products, sugar and coffee. The suggestion of reducing VAT on products such as pasta, rice, cleaning products and personal hygiene items has also been raised, although the likelihood of selecting the latter two categories of products is remote.
The Finance Ministry emphasizes that the new product package should consist of items that have seen significant price increases in the past year, in order to be incorporated into a decree.
