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The Cypriot finance ministry said it is monitoring the recent rise in fuel prices, which have increased over the past weeks amid developments in the Middle East.
Finance ministry spokesman Michalis Papadopoulos told the Cyprus Mail that the government would take “requisite measures” if the situation warranted action. He noted that an 8.33‑cent reduction on the fuel consumption tax, which was extended last week, will remain in force until the end of November.
One potential tool the ministry could use is a temporary reduction in the value‑added tax (VAT) on fuel. However, a European Commission spokesman has previously stated that cuts to VAT on fuel would not be compliant with EU law, as the EU VAT directive does not allow a reduced rate for fuel supplies.
German Economy Minister Katherina Reiche said on Wednesday that a temporary VAT reduction on fuel would be “sensible” amid rising costs. She added that such a measure would relieve consumers immediately at the petrol pump. The German government had previously ruled out the possibility in May, after Spain and Poland had unilaterally lowered their own fuel VAT rates. The idea is now being revisited amid continued price increases and political pressure on Chancellor Friedrich Merz.
Greek Prime Minister Kyriakos Mitsotakis also addressed the fuel‑price issue on Thursday, stating that “the Greek reaction alone is not enough” and that Europe must take further action. He did not mention VAT rates directly.
Former EDEK leader Marinos Sizopoulos called in April for the Cypriot government to unilaterally reduce its fuel VAT rate, arguing that EU law does not apply to the Turkish‑Cypriot authorities. He said that petrol stations in the Republic of Cyprus face “unfair competition” from the north, where the Turkish‑Cypriot authorities have zeroed VAT on fuel since 19 March, along with five other fuel‑related taxes.
Since spring, fuel tankers docking in the north are exempt from docking fees, and no customs duty is paid on imported fuel. Fuel retailers in the north also pay no contributions to the Turkish‑Cypriot agricultural insurance fund or tourism incentive fund, and municipal weighing fees for fuel have been eliminated.
These developments highlight the complex interplay between domestic policy, EU regulations, and regional economic dynamics affecting fuel prices in Cyprus.
Article source: cyprus-mail.com | Image credit: cyprus-mail.com
