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Cyprus Tax Debt Surges to €4.05 Billion in Q1 2025 Amid Mounting Collection Challenges

by THEFUTURE.TEAM

September 3, 2025

Overview of Rising Tax Liabilities

In the first quarter of 2025, Cyprus’ overdue tax liabilities escalated to €4.05 billion, marking an increase of nearly €1 billion compared to the corresponding period in 2024. This figure, reported by the Tax Department to the House under article 9E of the Collection of Taxes Law of 1962 and the VAT Law 95(I)/2000, underscores growing fiscal challenges faced by the nation.

Detailed Breakdown of Direct Tax Arrears

The comprehensive report, delivered by Tax Commissioner Sotiris Markides, reveals that of the €3.4 billion owed in direct taxation, €2.54 billion constitutes unpaid tax, accompanied by €620.2 million in interest and €237.3 million in surcharges. However, the effective recoverable amount is significantly diminished. For instance, €867.6 million remains uncollectible due to pending appeals and objections, while debts related to insolvency or bankruptcy proceedings account for €665.3 million across 44,184 taxpayers. Furthermore, a monitored repayment plan involving monthly installments is in place for arrears amounting to €28.4 million across 422 taxpayers.

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Challenges in VAT Collection

The report also provides insights into VAT arrears, which now total €656.6 million. This includes €454.3 million in unpaid taxes, supplemented by €152 million in interest and €50.2 million in surcharges. With many debts being transferred into the TFA system, detailed categorization remains pending for the majority of cases. Nevertheless, €601.7 million linked to 7,273 taxpayers is under active management involving charges on immovable property, allocated to €369.6 million for direct taxation and €232.1 million for VAT.

Recovery Measures and Enforcement

Judicial and administrative measures have been progressively deployed. Direct tax arrears deemed collectible without court involvement stand at €1.27 billion, in addition to €424.6 million in VAT, while banks have already frozen or seized approximately €2 million. Strengthening enforcement, charges on immovable property and other legal instruments have been applied to secure a further €603.6 million worth of debts, and judicial enforcement actions cover €365.4 million linked to 4,332 taxpayers.

Operational Shortcomings and Audit Concerns

An accompanying audit service warning highlighted a systemic loss of potential revenue attributed to thousands of cases from 2014–2017 that fell outside the legal deadlines for assessment. The oversight impacted both individual and corporate taxpayers, with belated assessments undermining the state’s capability to enforce collection. The audit also pointed out that many cases were processed without rigorous audits, urging the Tax Department to prioritize high-risk firms and adhere strictly to legal assessment timelines to safeguard public funds.

Conclusion

The findings underscore a critical juncture for Cyprus as the nation grapples with escalating tax arrears amid evolving economic challenges. Strategic reforms in tax enforcement and timely assessments are essential to restore fiscal discipline and secure the revenue base necessary for sustainable public finance.

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Cyprus President Champions Domestic Defence Industry For National Security And Economic Growth

by THEFUTURE.TEAM

February 18, 2026

Government Commitment To Strengthen National Defence

The President of the Republic, Nikos Christodoulidis, reaffirmed the government’s intention to enhance the country’s deterrence capabilities while expanding the potential of the domestic defense industry. Speaking during a high-level meeting at the Presidential Palace with members of the Cyprus Defence Industry Council, he outlined a strategy that connects national security priorities with long-term economic development.

Performance Assessment And Strategic Objectives

In the presence of Defence Minister Vasilis Palmas, the meeting focused on evaluating the achievements of the council one year following its establishment and delineating the path ahead. The President recalled, “Last year, we decided to institutionalize the Cyprus Defence Industry Council. Today, we review our targets and assess what has been achieved and what remains pending. We discussed the need for a registry of Cypriot companies. It is crucial to amplify the international presence of our enterprises. I remain deeply confident in your capabilities,” emphasizing a performance-driven approach aimed at enhanced operational transparency and market expansion.

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Positioning The Industry As A New Economic Pillar

President Christodoulidis expressed his firm belief that the Cypriot defence industry could emerge as a significant economic driver. He described it as a “promising new pillar” for the nation’s economy, bolstered by European initiatives such as the SAFE framework, supplementary equipment procurement plans from third countries, and participation in international trade exhibitions. Such strategies, he noted, open up further opportunities for local businesses to integrate into the global arms market.

International Outreach And Future Economic Impact

The President also pledged active support at an international level, citing his positive response to an invitation to Athens to engage in initiatives aimed at enhanced exposure and collaboration. He was confident that the industry’s contribution could realistically reach a double-digit share of Cyprus’ GDP in the coming years, a target he described as not only ambitious but entirely attainable given current capabilities.

Clear Vision For Measurable Progress

Concluding the meeting, President Christodoulidis reaffirmed his commitment: “I am fully aware of your potential. This is an emerging sector critical to both our economic future and our national security. Today, I expect us to review our concrete achievements, address the areas requiring improvement, and steer this initiative toward even greater success.” This decisive call for accountability and action underscores a broader strategic agenda that intertwines national defence imperatives with forward-looking industrial and economic policies.