Cyprus will continue its zero VAT rate on basic goods until December 2026, as announced by Finance Minister Makis Keravnos. This extension comes after a Cabinet meeting, where a proposal from the Finance Ministry was approved, allowing the measure to remain in place beyond its initial expiration date of December 2025.
Zero vat: Essential Products Remain VAT-Free
The products benefiting from this zero VAT rate include children’s milk, nappies for both children and adults, female hygiene products, and fresh or chilled fruits and vegetables. Keravnos emphasised that this decision is aimed at alleviating the financial burden on vulnerable households.
Supporting Vulnerable Households
By maintaining the zero VAT on these essential products, the government believes it can directly reduce the expenses of those most in need. “This measure increases their available income and improves the standard of living,” Keravnos stated during the announcement.
Government’s Commitment Amid Inflation Concerns
Despite forecasts indicating that inflation is expected to remain at zero per cent for 2025, the government remains committed to supporting vulnerable citizens. Keravnos highlighted the importance of this measure for those facing economic challenges.
Financial Allocations for Local Authorities
During the press conference, Keravnos addressed concerns raised by the union of municipalities regarding local authority finances. He revealed that the Ministry of Finance has allocated €27 million for 2025, with an additional €15 million for 2026 expected to be disbursed in November, and another €12 million within the course of 2026. These funds are part of the government’s commitment to supporting local authorities.
A Call for Dialogue
Keravnos also expressed a willingness to engage in discussions with local authorities, stating that the Finance Ministry is open to hearing opinions and suggestions. He reiterated that the government had not imposed any restrictions on constructive proposals, emphasising the importance of dialogue and cooperation.
Looking Ahead
As the extension of the zero VAT rate on basic goods takes effect, the government hopes to provide relief to those most affected by economic pressures. With ongoing discussions about local authority funding and support measures, the Finance Ministry aims to ensure that dialogue remains a priority in addressing financial concerns across the nation.
