Newsroom
Cyprus’ Tax Department says it pulled in almost €30 million over the past two years after stepping up audits on companies flagged as high-risk, according to testimony before the Parliamentary Audit Committee on Friday.
Assistant Tax Commissioner Christos Karoullas told lawmakers that the department agrees with concerns raised by the Audit Office and has already issued new instructions under the recently appointed Tax Commissioner, Sotiris Markides.
“Whether it’s artists getting paid in cash or nightclubs overcharging to avoid VAT, these practices have to stop,” -Irini Charalambides.
A new system designed to catch high-risk cases appears to be paying off. Karoullas said the department’s tax-return audit unit, now operating with upgraded data tools, carried out 35,000 checks across 2024 and 2025, bringing in €14.3 million in revenue. A separate, island-wide VAT audit unit brought in another €15.6 million over the same period through on-site inspections.
But the Audit Office says there’s still a long way to go. Auditor General Andreas Papakonstantinou told MPs that weaknesses remain in how high-risk cases are handled, particularly in the hospitality and events sector. One example involved Larnaca’s Mackenzie beachfront, where some businesses used reduced VAT rates without meeting the criteria, an issue left unresolved for years.
Audit officers also highlighted cases where complaints dating back a decade were never fully investigated. In one instance, a company organized dozens of events, including a 3,000-person concert, without paying VAT. Similar gaps were flagged in the taxation of artistic events, with concerns ranging from undeclared income to artists being paid in cash and leaving the island without proper reporting.
Karoullas said the department is now building a nationwide registry of artistic events to tighten oversight, with about 200 events already earmarked for inspection in 2025. Local authorities, especially in Larnaca, say they are also fighting a constant “battle” to track down unlicensed events.
Officials from the Deputy Ministry of Tourism added that longstanding legal complications surrounding Turkish Cypriot-owned properties in the Mackenzie area are expected to be resolved under a new framework for leasing and licensing.
MPs across the political spectrum welcomed the more aggressive audit approach. Committee chair Zacharias Koulias praised the department’s progress, saying the new audit teams are producing clear results. AKEL MP Irini Charalambidou urged the government to quickly fill around 100 vacant posts and equip inspectors with modern tools, arguing that proper staffing is key to eliminating chronic tax evasion.
“Whether it’s artists getting paid in cash or nightclubs overcharging to avoid VAT, these practices have to stop,” she said.
