Factsheet for measure
CY-2023-18/3178
–
Updated
– measures in Cyprus
Zero VAT rate for essential goods
Εφαρμογή μηδενικού συντελεστή Φ.Π.Α. σε βασικά είδη
Background information
On 2 May 2023, the Cabinet issued a decree that amends the VAT legislation to apply a zero rate of VAT to supplies of certain essential goods. The aim of the measure is to relieve households from the increasing prices of essential goods due to the economic impacts of the pandemic and the war in Ukraine.
Content of measure
The list of the essential goods included in the Zero VAT list are:
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Bread: all types of bread, fresh or frozen, with or without yeast (e.g., white, black, wholemeal, multigrain, peasant, rye, rye bread, corn bread, baguette, ciabatta, bread in fritters, loaves, bread rolls, pitta bread). Bakery products with added ingredients such as raisins, nuts, flavourings are excluded from the list.
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Milk: fresh milk (e.g., cow's milk, goat's milk, sheep's milk), sweetened milk, condensed, long-life, flavoured milk (e.g., chocolate, banana), plant milk (e.g., almond, soy, rice).
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Eggs
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Baby food: powdered, dry and/or liquid food intended for consumption by children. Snacks (e.g., chips, dry or powdered food, dried food, nuts, candy, chocolate, ice cream etc.) are excluded from the list.
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Children's diapers
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Products for feminine hygiene protection (tampons, sanitary towels, sanitary napkins)
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Adult diapers
This measure is expected to cost €11 million.
Updates
The following updates to this measure have been made after it came into effect.
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31 October 2024
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On 28 June 2024, a decree was issued, after the decision of the Cabinet, for the extension of the measure covering the period up until 30 September 2024. In October 2024, the government announced the termination of the subsidy of zero VAT for essential goods, which provoked the reactions of the civil society and political parties. After these reactions of the society, the government reinstated the measure by issuing a new decree extending the measure from 04 November 2024 to 31 December 2024 for some of the essential goods including milk, baby food, children’s diapers and products of feminine hygiene protection and excluding bread and eggs.
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21 February 2024
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On 21 February 2024, the Cabinet decided that the measure for zero rate of VAT on essential goods will remain in force until the end of May 2024.
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13 September 2023
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On 9 September 2023, the Cabinet decided to extent the measure for another 6 months and expand the list of essential goods with zero VAT by adding coffee and sugar. Additionally, on 19 October, the Minister of Finance announced that meat and vegetables are included in the zero VAT list from 1 December 2023 to 31 May 2024.
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Use of measure
No information available.
Target groups
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Workers
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Businesses
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Citizens
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Does not apply to workers
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Does not apply to businesses
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Applies to all citizens
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Actors and funding
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Actors
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Funding
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National government
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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No involvement
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No involvement
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Form
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Not applicable
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Not applicable
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Social partners' role in the
implementation, monitoring and assessment phase:
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No involvement
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Main level of involvement: N/A
Involvement
The measure was designed by the Ministry of Finance and the Tax Department and upon the decision of the members of the Cabinet; no social partner or political party has been invited to participate in any kind of consultation. However, the measure emerged after the pressure that civil society, political parties and the union movement exercised to the government to take measure in order to relieve consumers from the increased prices.
Views and reactions
Social partners, political parties and the consumers’ associations welcomed the decision of the government. At the same time, they highlighted the necessity for inspections for the right implementation of the measure by the providers of the essential goods in the list. They also pointed out the need for the expansion of the essential goods with zero VAT.
Sources
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02 May 2023: Μηδενικός Συντελεστής ΦΠΑ σε Βασικά Είδη
(www.mof.gov.cy)
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28 June 2024: ΟΙ ΠΕΡΙ ΦΟΡΟΥ ΠΡΟΣΤΙΘΕΜΕΝΗΣ ΑΞΙΑΣ ΝΟΜΟΙ ΤΟΥ 2000 ΜΕΧΡΙ 2024 Κ.Δ.Π. 231/2024
(www.mof.gov.cy)
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31 October 2024: ΟΙ ΠΕΡΙ ΦΟΡΟΥ ΠΡΟΣΤΙΘΕΜΕΝΗΣ ΑΞΙΑΣ ΝΟΜΟΙ ΤΟΥ 2000 ΜΕΧΡΙ 2024 Κ.Δ.Π. 349/2024
(www.mof.gov.cy)
