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.
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