Stricter Enforcement Under New Tax Laws

The Cyprus Tax Department is preparing to begin sealing business premises with unpaid tax liabilities as part of enforcement measures introduced under the country’s tax reform framework, which came into effect on January 1, 2026. The measures are expected to be implemented during the summer and form part of broader efforts to strengthen tax compliance and recover overdue public revenue.

Empowering Authorities With Enhanced Tools

Under the legislation, tax authorities are granted expanded enforcement powers, including the suspension of business operations and the temporary sealing of premises. The measures apply to businesses with outstanding liabilities exceeding €20,000, including surcharges and penalties. Covered obligations include income tax, special defence contribution, capital gains tax, VAT, withheld taxes and other related contributions.

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Targeted Compliance Campaign

The new framework forms part of a wider compliance campaign targeting individuals and businesses that have failed to settle tax obligations. Authorities may proceed with enforcement in cases involving self-assessments or final tax assessments issued by the Tax Commissioner. Businesses or individuals currently challenging liabilities through administrative or judicial procedures are excluded from the enforcement process.

Structured Enforcement And Repayment Options

Tax authorities are already categorising debtors according to the size of outstanding liabilities in order to prioritise enforcement actions. The process includes three warning stages: an initial notice, a second notice after ten days and a final warning providing five additional days before premises can be sealed. Initial closure orders may remain in place for up to ten days, while continued non-compliance could lead to extensions of up to 20 additional days.

Incentivizing Settlement Through Repayment Agreements

Businesses entering structured repayment arrangements or instalment plans will be able to avoid closure measures. The approach is intended to encourage settlement of unpaid liabilities while allowing businesses additional time to regularise outstanding obligations.

A Strategic Shift In Tax Enforcement

The initiatives signal a significant shift in the country’s tax enforcement strategy. By focusing on active businesses and applying pressure on large-scale offenders, Cyprus is adopting a methodical approach to ensure compliance, reduce fiscal gaps, and ultimately, secure tax revenues.