Cyprus pushes for further fuel tax cuts and challenges EU VAT policies

During the presentation of the 2027 state budget to the parliamentary Finance Committee on Monday, Cypriot Finance Minister Makis Keravnos announced that the government has successfully reduced the excise tax on heating oil from 7 cents to 2.1 cents per liter. The administration is now actively lobbying Brussels for additional reductions to mitigate the impact of the energy crisis and inflation on consumers. A legislative bill to implement the current cut starting this November was submitted to Parliament last week.

Beyond heating oil, Minister Keravnos signaled a confrontational approach regarding European Union tax directives. The government intends to initiate proceedings with the European Commission to challenge the practice of charging VAT on top of excise taxes, which officials describe as a form of double taxation. Keravnos stated that the state will contest the automatic application of EU directives, characterizing the current VAT structure as illogical. Regarding the Cyprus-Greece electricity interconnector, the Minister confirmed that the government is currently reviewing a viability study while emphasizing that the project's costs must not burden the Cypriot public.