Cyprus’ Minister of Finance, Makis Keravnos, announced the extension of the zero VAT rate on a number of socially important goods until December 2026. The decision was approved during a Cabinet meeting on Wednesday, October 29, and is intended to support families with children, pensioners, and low-income citizens.
Originally, the zero VAT rate was set to expire in December 2025, but the Cypriot government decided to extend the measure for an additional 12 months, given its positive impact on citizens’ purchasing power and the overall standard of living.
Which Products Remain VAT-Free
The extension covers baby formula, diapers for both children and adults, feminine hygiene products, as well as fresh and chilled fruits and vegetables. According to the minister, maintaining a zero VAT rate on these essential items reduces the expenses of vulnerable households and increases their disposable income, helping citizens feel more secure in their daily lives.
Keravnos emphasized that even with inflation expected to remain at zero in 2025, the government continues to prioritize social support measures. “This is not just an economic decision,” he said, “but a step aimed at preserving social justice and improving the quality of life for Cypriots.”
Funding and Support for Municipalities
In addition to tax measures, the minister addressed the issue of financing local authorities. He reminded that, under the 2025 state policy, €27 million has been allocated, with another €15 million to be provided in November 2026, and an additional €12 million over the following year.
These funds are intended to strengthen the financial stability of municipalities and support the implementation of local social and infrastructure programs. Keravnos underlined that the government is fulfilling all its commitments and remains open to constructive dialogue with representatives of local authorities.
Importance of Dialogue and Cooperation
The minister stressed that the Ministry of Finance is always ready to listen to well-founded proposals and remains open to cooperation with professional associations, municipal councils, and public organizations.
“We do not impose decisions — we listen, discuss, and act in the interest of society,” Keravnos stated, adding that dialogue and mutual understanding, rather than pressure or threats, remain the key tools of effective policymaking.
Commitment to a Socially-Oriented Economy
The extension of the zero VAT rate is part of a broader government strategy aimed at maintaining social stability and stimulating domestic demand. According to the Ministry of Finance, Cyprus continues to show positive economic growth, low unemployment, and stable prices in 2025.
Experts note that maintaining tax relief on essential goods helps curb the rising cost of living, especially amid global fluctuations in food and energy prices. Thus, extending the measure until the end of 2026 represents an important step toward strengthening Cyprus’s economic resilience and providing continued social support for its citizens.