Cyprus Launches Large-Scale Tax Inspections

The Cyprus Tax Department has stepped up enforcement of the rules introduced as part of the tax reform. According to local media reports, around 50% of the businesses inspected in recent days were found to be violating the current legislation. Inspectors identified companies that:

1. failed to issue customers with receipts or invoices;
2. refused to accept payments by bank card;
3. failed to comply with the requirements for issuing tax documents.

The initial results of the inspections have caused serious concern among the tax authorities. Although the number of inspections carried out so far has been relatively small, such a high rate of violations indicates that the problem is widespread. It should be noted that new tax reform requirements came into force in Cyprus on 1 July 2026. In particular, electronic payment methods became mandatory for property rental payments, while the state significantly strengthened its oversight of cashless transactions and the transparency of financial operations.

Inspections Are Taking Place Across Cyprus

Over the past 10 days, Tax Department officers have conducted 30 surprise inspections of businesses in the country's tourist areas. The inspections covered:

1. restaurants;
2. bars;
3. companies offering water sports activities;
4. souvenir shops;
5. kiosks;
6. operators of boat excursions.

The inspections were carried out in:

1. Ayia Napa;
2. Protaras;
3. Larnaca;
4. Paphos.

Inspectors compared data from cash registers with information obtained directly from customers. Visitors leaving establishments were asked whether they had received an official receipt, whether the amount shown on the document matched the payment made and whether the transaction had been completed in cash or by bank card. Particular attention is currently being paid to coastal areas, where economic activity reaches its peak during the height of the tourist season.

Businesses Will Be Sealed for Repeated Violations

The Tax Department is not limiting itself to warnings. If a business fails to correct the violations after the first inspection, it will receive a second notice. This will be followed by a third official warning. If the legal requirements are still not met and the situation remains unchanged within 5 days, the authorities will be able to seal the premises and temporarily suspend the business's operations.

This is the first time the new measure allowing businesses to be closed for systematic non-compliance with tax legislation has been applied in practice. According to Tax Commissioner Sotiris Markides, the department's objective is not to punish businesses at any cost, but to achieve voluntary compliance with the law. He also urged residents and tourists always to request an official receipt after every purchase or service, as this helps combat tax evasion.

Next Stage to Target Major Tax Debtors

In addition to checks on cash register compliance, the Tax Department is preparing for the next stage of its large-scale campaign. In the near future, measures to seal premises will also begin to be applied to companies with tax debts exceeding €20,000. Around 500 businesses operating in the following sectors will be the first to face tighter scrutiny:

1. bookmaking;
2. yacht sales;
3. the sale of premium-class vehicles.

Each of these companies owes the state more than €1 million in taxes. The authorities emphasise that tighter enforcement forms part of a broader strategy to improve tax collection, combat the shadow economy and ensure a level playing field for businesses. At the same time, the digitalisation of Cyprus's tax system is continuing, which will make it possible to automatically monitor transactions, the movement of funds and compliance with the new legal requirements.