Cyprus tax department to initiate business closures for major tax debtors this summer

Starting this summer, the Cyprus Tax Department will implement a new measure allowing for the temporary suspension and sealing of businesses with significant outstanding tax liabilities. This action follows a legal framework enacted at the beginning of the year as part of a broader tax reform. The policy targets businesses with final tax debts exceeding €20,000, including income tax, VAT, and capital gains tax, provided the debts are not currently under dispute or legal review. The Tax Department intends to focus primarily on large, active debtors to encourage the establishment of payment schedules. Before a closure is enforced, the department will issue three warnings over a 25-day period. If the business fails to comply, it may face an initial closure of up to 10 days, which can be extended to 20 days if non-compliance persists. Additional triggers for closure include operational infractions, such as the failure to issue required receipts and invoices. The primary objective of this measure is to improve tax compliance and ensure the collection of state revenue.