In recent years, tax revenues in Cyprus have shown steady growth. While the treasury received around €5 billion in 2023, this figure increased to €7.4 billion in 2024. Tax revenues are forecast to exceed €8 billion in 2025, which would set a new record.
At the same time, the Tax Department is actively refunding overpaid amounts. In the first eight months of 2025 alone, approximately €500 million was refunded, €440 million of which was VAT. According to Tax Commissioner Sotiris Markidis, the refund process now takes no more than two weeks, whereas previously it took months.
Tax arrears
Despite the positive trend in revenues, the problem of arrears remains relevant. At the end of 2023, tax arrears totalled €3.1 billion. Of this amount, around €1.4 billion is considered high risk and may remain uncollected. Particular attention is being paid to the tax debts of sports clubs. According to the Tax Department, the state receives around €500,000 per month in repayment of these debts.
The digital transformation of the tax system
One of the key steps in solving tax administration problems will be the introduction of the new Tax for All system, which has been developed in partnership with the New Zealand company Data Torque. The €30 million project is expected to be fully completed by the end of 2026. Currently, the system is around 70% complete. It will enable tax data to be integrated with other government services, including the Land Registry, thereby increasing transparency and streamlining administration.
How many Cypriots pay taxes?
Currently, around 100,000 companies and 320,000 individuals are registered with the Cypriot tax authority. This number is constantly growing thanks to stricter controls and the digitisation of the system.
The fight against tax evasion and high-profile cases
The head of the tax service confirmed that the agency is working on a bill to regulate large tax debts, including high-profile cases involving international companies.
Cyprus actively encourages anonymous complaints about tax evasion. As Markidis noted, citizens often report former employers or business partners. Sometimes the motivation is personal revenge, but even such reports help the tax service to identify genuine violations.