The government has confirmed that Cyprus’s planned VAT rise will take place on March 1.

The tax hike will see the standard rate of VAT rise from 15% to 17%. The government estimated last year that the measure will generate an annual €150 million ($214 million).

Giannos Ioannou, a tax consultant at Eurofast – Taxand, expects the cost of the VAT rise to be passed onto consumers.

“The government has clarified that there would be no raise on the 5% VAT which applies on foodstuff and pharmaceuticals, or the 8% VAT which applies on services in the hotel sector, transportation, on the services of restaurants and the supply of food in the course of catering,” said Iannou.