Cyprus government evaluates fuel tax extensions and fiscal support measures

Since 2023, the Cypriot government has allocated over €1 billion across five support packages to mitigate inflation driven by the energy crisis and geopolitical conflicts. Finance Minister Makis Keravnos highlighted that the state’s fiscal surplus and reduced public debt are enabling ongoing support for vulnerable households, workers, and small businesses. Following the implementation of tax reforms in January, the government is focusing on maintaining economic resilience through targeted interventions.

Regarding immediate relief measures, the government intends to extend the reduced excise duty rates on motor fuels until March 2027, with a formal proposal slated for the Cabinet. Current reductions are set to expire at the end of November. Additionally, Cyprus is negotiating with the European Commission to further reduce excise duties on heating oil, having already reached the current EU minimum of 2.1 cents per liter. Minister Keravnos plans to advocate for greater fiscal flexibility at upcoming Eurogroup and ECOFIN meetings to allow member states to reduce taxes on energy products below standard EU limits. While domestic officials report a potentially positive attitude from Brussels, some sources indicate that the European Commission's stance remains restrictive.