Cyprus: Consultations on draft legislation on carbon tax on energy products, daily accommodation fee

Public consultations on draft legislation imposing a carbon tax on energy products and daily accommodation fees

Consultations on draft legislation

Public consultations on draft legislation imposing a carbon tax on energy products and daily accommodation fees closed on 19 March 2024.

Carbon tax on energy products

The legislation would impose a carbon tax (subject to certain exceptions) on:

  • Stocks of energy products (i.e., gasoline, gas oil used as motor fuel, certain categories of lighting oil (kerosene), and liquified petroleum gas (LPG)) already under consumption that are stored in petroleum stations or held by petroleum resellers and petroleum companies
  • Carbon emissions emitted by polluting industries

The carbon tax would be imposed on energy products even if they are exempted from the imposition of excise duties. In addition, value added tax (VAT) would be charged and collected on the value of products subject to carbon tax.

Accommodation fee

The legislation would impose a daily accommodation fee of €2.50 charged to every resident using a room or accommodation or living space in hotel units, tourist accommodation, and self-catering units in Cyprus.

No VAT would be imposed on the accommodation fee.

Proposed effective date

The Ministry of Finance is seeking to impose both taxes from 1 April 2024.

Read a March 2024 report prepared by the KPMG member firm in Cyprus


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