Cyprus Introduces New VAT Rates

Cyprus has recently introduced significant changes to its value-added tax (VAT) system, aimed at assisting individuals with disabilities. These changes, which were enacted on Thursday, 13 July 2023, include the implementation of a new super-reduced VAT rate of 3% and an extension of the application of 0% VAT for goods used by people with disabilities.

Under the updated regulations, certain goods that were previously subject to a 5% VAT rate now qualify for a 0% VAT rate. These items are specially designed to aid individuals with disabilities and include typewriters with Braille characters, special electronic typewriters like electronic pocket communication devices, and new type embossing typewriters. Additionally, wheeled and other vehicles exclusively used for personal use by people with disabilities fall under the 0% VAT category.

Furthermore, a range of other goods and services has been designated under the new 3% VAT rate. These include various publications like books, newspapers, and periodicals in physical or electronic form, with the exception of publications primarily for advertising or consisting mainly of video or audio content. Books specifically intended for people with disabilities are also subject to the 3% VAT.

Moreover, certain medical and mobility aids for individuals with disabilities are included in the 3% VAT category. These items comprise special lifting devices, wheelchairs, orthopedic items, surgical belts or bandages, crutches, splints, prosthetic items, hearing aids for the deaf, and other assistive devices.

In addition to goods, specific services are also affected by the new 3% VAT rate. Private entities offering street cleaning, sewage, and refuse collection services are now subject to this rate, while services provided by state, local authorities, and public law bodies remain exempt.

Businesses dealing with goods and services impacted by these changes should take the necessary steps to understand and comply with the new VAT rates. This includes considering aspects such as stock taking (inventory counting) and tax points (time of supply) before implementing the revised VAT rates. Adapting to these modifications will not only ensure compliance but also help support individuals with disabilities in Cyprus.

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