The Cyprus Tax Department intends to shut down 500 businesses whose outstanding tax debts exceed €1 million. These companies will be the first to be targeted under a new law that allows authorities to suspend operations and seal the premises of non-compliant taxpayers. According to reports, the list includes supermarkets, betting shops, luxury yacht and boat dealers, as well as factories and industrial enterprises. Despite repeated warnings and recommendations from the Tax Department to settle their liabilities, all of these companies have failed to respond.
Why These Companies Were Selected
Each of the 500 businesses has already undergone a detailed review. Tax Department records show that these companies continue to operate while failing to pay the amounts due. Under the law, closure measures may be imposed on legal entities with debts exceeding €20,000. However, the department has decided to begin with the largest debtors—those owing more than €1 million to the state. These liabilities include both the principal amount and accumulated penalties.
Three Notices Over 25 Days: The Procedure Before Closure
The new enforcement mechanism will take effect in June 2026. Businesses will not be shut down immediately. Instead, they will receive three warnings and will have a total of 25 days to respond. According to officials, the goal is to compel major debtors to begin meeting their obligations. The government hopes to recover the outstanding amounts either through full payment or through agreed installment plans. If a company ignores all three notices, its operations will be suspended and its premises sealed.
Which Taxes Are Included in the Debts
The debts cover direct taxes, including income tax, the special defence contribution, and capital gains tax. They also include withheld taxes and contributions, as well as value added tax (VAT). These amounts are based either on self-assessments submitted by taxpayers or on assessments issued by the Tax Commissioner. Importantly, these liabilities are now final, meaning that appeal deadlines have expired or all administrative and judicial proceedings have been concluded. As a result, the companies can no longer challenge the existence of the debt itself.
Closure measures also threaten businesses that fail to issue receipts or invoices, issue inaccurate fiscal documents, or obstruct Tax Department inspectors during audits. To combat such violations, the department has already purchased tablets and completed the necessary technical setup, including integration with its internal software systems. Inspection standards have been approved, and tax officers will undergo training to ensure that receipt and invoice checks are carried out accurately and consistently.
Deadline for Companies That Have Not Filed Returns
The law on suspension of business activities also applies to companies that have failed to submit income tax returns, VAT returns, or reports on withheld taxes and contributions. These businesses have until the end of 2026 to correct the situation. If they fail to comply, their operations will be suspended from January 1, 2027.
This gives companies a transition period of nearly six months to comply voluntarily with tax legislation before the strictest sanctions are imposed.