New VAT rates as from 21 July 2023

On 21 July 2023, an amendment to the Value Added Tax (VAT) law was published in the Official Gazette of the Republic, introducing reduced VAT rates of 3% and 0% for certain goods and services. The new amendment, being one of new social policy measures (another amendment has recently implemented temporary application of 0% VAT rate for certain goods), aims to harmonize CY VAT Act with EU Directive 2022/542 regarding VAT rates:

The supply of the following goods will be subject to 0%:

• Braille typewriters, including any special electronic typewriters and new type embossing typewriters for people with disabilities.
• Wheelchair carriages and other vehicles that are intended exclusively for the personal use of people with disabilities.

The supply of the following goods and services will be subject to 3%:

• Books, newspapers and magazines, including electronic publications and talking books for people with disabilities. The reduced rate will not apply to advertising materials, publications consisting primarily of video or audio and to non-profit organizations.
• Special lifting devices for people with disabilities, e.g., stairs, lifts, hoists.
• Wheelchair carriages and other vehicles for people with disabilities.
• Medical devices, including orthopedic articles and apparatus, prosthetic items, hearing aids, medical surgical belts, bandages and crutches, splints, braces and other articles and devices for fractures.
• Street cleaning, waste collection and waste treatment services, provided by non-governmental entities.
• Wastewater disposal and treatment and emptying of septic and industrial tanks.
• Admission to theatres, concerts and similar cultural events and facilities.

Considering amendments of VAT rates, we recommend proceeding with the adjustment of your accounting systems and invoicing procedures to ensure timely application of the updated VAT rates.

Should you require further clarifications on the provisions of the Amending Law and their application, please contact our trusted advisors in the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.