Cyprus’ economy is expected to demonstrate resilience in 2025, with a projected growth rate of 3.1%, surpassing the EU average, Finance Minister Makis Keravnos stated on Friday.
2024: A Year of Positive Economic Indicators
Speaking at the Safe VAT Forum in Nicosia, Keravnos reflected on the economic milestones achieved in 2024. Unemployment dropped to near full employment levels, and inflation eased to approximately 2%. The finance minister also noted that VAT revenue accounted for 47% of total tax revenue, highlighting its critical role in the country’s finances.
Keravnos credited the successful rollout of the digital “Tax For All” system, which increased taxpayer compliance through improved digital services. The system not only boosted VAT revenue but also supported broader economic stability.
Tax Reform and Future Growth
The finance minister outlined ongoing tax reform initiatives designed to modernize the system and align it with the EU’s green and digital priorities. These reforms aim to:
Keravnos also emphasized Cyprus’ strong fiscal performance, highlighting high primary surpluses and the country’s reputation as one of the best-performing EU nations in terms of public finances. This prudent fiscal management is expected to significantly reduce public debt as a percentage of GDP.
The minister added that Cyprus had received eight credit rating upgrades under the current administration, further validating the economy’s robust performance.
Projections for 2025
Looking ahead, Keravnos expressed confidence in the economy’s continued resilience, with the 2025 growth forecast of 3.1% once again exceeding EU averages.
Tax Revenue Trends
At the forum, assistant commissioner of taxation Ioannis Zevlaris provided insights into the Tax Department’s revenue growth. Between January and October 2024, revenue increased by 10% compared to the same period in 2023.
Zevlaris noted that the department’s annual revenue surpassed €6 billion for the first time in 2022, climbed to €6.7 billion in 2023, and is expected to exceed €7 billion in 2024. Since its implementation in March 2023, the “Tax For All” system has facilitated the collection of €4.7 billion in VAT, processed 150,000 refund requests, and issued €830 million in VAT refunds.
Forum Focus
The forum, held at the European University, focused on the theme “VAT of Today and Tomorrow: Challenges and Applications in the Era of the 4th Industrial Revolution.”
Source: Cyprus Mail