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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.

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.

FinTech’s Dominance In MENA: Three Strategic Drivers Behind Unyielding VC Success

by THEFUTURE.TEAM
September 11, 2025

Despite facing tightening global liquidity and macroeconomic headwinds, the FinTech sector continues to assert its leadership in the MENA region. In the first half of 2025, FinTech emerged as the most resilient and appealing arena for venture capital investments, proving its worth as a catalyst for financial innovation and inclusion.

Addressing Structural Financial Gaps

In many parts of MENA, a significant proportion of the population remains underbanked and underserved by traditional financial institutions. FinTech companies are uniquely positioned to address these persistent challenges by bridging critical access gaps and driving financial inclusion. With the proliferation of payment apps, digital wallets, and micro-lending platforms, investors have witnessed firsthand how these solutions pave the way for scalable growth and eventual exits. Early-stage momentum in the region is underscored by a doubling of pre-seed deals year-over-year, reinforcing the sector’s capacity for rapid innovation and sustainable expansion.

Highly Scalable and Replicable Business Models

One of the key factors behind FinTech’s dominance is the inherent scalability of its business models. Once the necessary infrastructure and regulatory approvals are in place, these models have demonstrated robust performance across borders. The first half of 2025 saw a marked acceleration in deal activity, with payment solutions leading the charge with 28 deals in MENA—a significant increase over the previous year. Lending platforms, in particular, experienced a meteoric 500% year-over-year increase in funding, emerging as the fastest-growing subindustry. Such replicability makes FinTech an attractive proposition for investors seeking high-growth opportunities in diverse markets.

Supportive Regulatory And Government Backing

The strategic support offered by key government initiatives in the UAE and Saudi Arabia has been instrumental in propelling the FinTech sector forward. Progressive frameworks, such as the UAE’s open finance and digital asset directives, coupled with Saudi Arabia’s live-testing sandboxes, have materially lowered entry barriers for startups. These measures not only foster innovation but also streamline the path to commercialization. Consequently, the combined efforts of these regulatory bodies have enabled the UAE and Saudi Arabia to account for 86% of MENA’s total FinTech funding in H1 2025.

The resilience of FinTech in MENA is not merely a reflection of contemporary market trends—it signals a fundamental shift in the region’s economic fabric. With an unwavering commitment to addressing real financial challenges, scalable and replicable business practices, and robust regulatory support, FinTech is setting the benchmark for sustainable innovation. As capital markets become increasingly discerning, this sector stands out as a beacon of long-term growth and transformative impact.

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