Zero VAT in Cyprus has lowered prices. A first inspection shows a drop of around 5%.

The zero VAT regime in Cyprus has been reflected on store shelves. According to the first random inspection by the Consumer Protection Service, the vast majority of products tested under the extended tax relief have fallen by approximately 5% compared to pre-tax prices.

As of October 12, the lower rate applies to additional categories of basic foods, including bread, milk, coffee, sugar, and baby food. The measure is expected to remain in effect until May 31, 2027. However, the Office emphasizes that the zero tax rate does not mean a price freeze for this entire period.

Zero VAT in Cyprus: what did the audit show?

The Consumer Protection Service compared prices of selected items before and after the extended discount came into effect. The monitoring covered products available in large supermarkets. Data from the government price comparison website e-Kalathi was also used.

In the vast majority of cases examined, reductions were recorded that were approximately equivalent to the benefit resulting from the abolition of the tax.

This is a positive signal for buyers. In the sample studied, the reduction in VAT translated into retail prices, rather than being offset by an increase in net prices.

However, this wasn't a list of all products available on the market. The results shouldn't be interpreted as meaning that all food in Cyprus was reduced by 5%, nor that this exact reduction was applied to every package.

Which products are covered by the discount?

The extension applies to specific food categories specified in the regulations. The inspection notice lists bread, milk, coffee, sugar and baby food.

Until May 31, 2027, the zero rate was also maintained for the types of meat, poultry, fish and other fishery products specified in the regulations.

Don't automatically assume that the discount applies to every product containing milk, coffee, or sugar. It's the category range defined in the regulations that matters, not just the ingredients or brand name of the item.

Zero VAT - the most important information

Since when was the relief extended?

From October 12, 2026.

Until when is it valid?

Until May 31, 2027.

What did the first inspection cover?

Selected products from additional categories: bread, milk, coffee, sugar and baby food.

What was the result?

The vast majority of tested products have fallen in price by approximately 5 percent compared to their pre-change prices.

The inspection was random. The result does not indicate an identical reduction across all products available in stores.

Why doesn't the abolition of 5% VAT mean exactly a 5% discount?

It is worth distinguishing between the tax rate and the percentage decrease in the final price.

If the product cost 2.10 euros, of which 2 euros was the net price, and 10 cents VAT, after the tax is abolished it should cost 2 euro — assuming unchanged net price.

The reduction of 10 cents compared to the previous 2.10 euros is about 4.76 percent In reports, this result is sometimes rounded to approximately 5%.

Therefore, when checking a specific price, it's important to compare the same product, package size, and sales conditions. The end of a promotion can further complicate the assessment of the tax's impact.

This is part of a larger package against price increases.

The extension of the zero rate is part of the government's package of seven protective measures with a total value of approximately 70 million euros.

We have already reported on the government's previous decisions, deadlines and other forms of support in CyprNews.

Prices may rise again

Zero VAT reduces the tax component of the price, but it does not prevent changes in production, transportation, or raw material costs. If these costs increase, the product may become more expensive despite the tax relief.

Therefore, the first inspection shows the effect of the solution's implementation, not a guarantee of unchanged prices until the end of May. The Consumer Protection Service announces further market monitoring.

For households, it still pays to compare offers. Just because a product is zero-rated doesn't mean it will cost the same in every supermarket.

The initial results are favorable for consumers: in most of the verified cases, relief has reached buyers. Further checks will show how prices behave in the coming weeks and months.

Sources: Consumer Protection Service, Tax Department, Politis, CyprNews.