Newsroom
Cyprus is on track to rake in more than €8 billion in tax revenue this year, up from €7.4 billion in 2024, a milestone that underscores the Tax Department’s push for better compliance and modernization.
Speaking before the Parliamentary Audit Committee, Tax Commissioner Sotiris Markides highlighted the dramatic growth in revenues over the past four years. “In 2021, we collected about €5 billion. In 2024, that rose to €7.4 billion, and in 2025 we expect to exceed €8 billion,” he said.
The surge comes as authorities work to simplify procedures, target high-risk taxpayers, and implement modern audits across the island. Auditor General Andreas Papaconstantinou praised the effort, noting that “a great effort was made from 2021 to 2024, and there was a significant increase in state revenues.”
Yet, challenges remain. Arrears, taxes owed but not yet collected, have jumped nearly €1 billion in two years, from €2.2 billion in 2021 to €3.1 billion in 2023. About €1.4 billion of that may be hard to recover, Papaconstantinou warned, urging the Department to take swift action, including seizing bank accounts or pursuing legal accountability for company directors.
Director of the Audit Office (EY), Maria Pavlou, said that despite rising collections, the department still struggles to monitor timely submissions and manage complaints effectively. Still, unpaid taxes have decreased significantly, from 830,000 cases in 2023 to 220,000 last year.
Part of the revenue push comes from modernization. The department is rolling out a €30 million computerized system expected to be 90% implemented by the end of 2026, which aims to streamline audits, reduce the risk of corruption, and unify processes across the island. “Without proper computerized systems, we cannot carry out our work,” Markides said.
The Department also accelerated VAT refunds this year, returning more than €500 million, including €440 million in VAT alone, while continuing to process fewer complaints than three years ago.
Even with fewer staff, 505 officers in 2024 compared with 533 in 2021, the department has maintained performance. Markides emphasized that filling existing vacancies could further increase collections and improve long-term compliance.
The Commissioner also pointed to structural changes aimed at making the Tax Department more effective and fair. District offices are being phased out in favor of pan-Cypriot units, each focused on specific tasks, under unified supervision. This centralization, combined with the new software, is intended to make audits more consistent and protect staff from outside pressure.
Other initiatives include improving compliance among clubs, which now generate about €230,000 monthly in receipts, and creating an independent internal appeals committee to ensure tax fairness.
