On 10 September 2026, the Ministry of Finance of the Republic of Cyprus formally announced the extension of reduced special consumption excise duty rates on fuel products until 30 November 2026. This decision, communicated by Minister of Finance Makis Keravnos, prolongs a temporary tax relief measure initially introduced in early 2022 to counteract the sharp rise in global energy prices following geopolitical disruptions. The legal basis for the reduction rests on the Special Consumption Tax Law (N. 184(I)/2004) as amended, and the measure is implemented in coordination with the European Commission under the flexibility provisions of Council Directive 2003/96/EC on the taxation of energy products and electricity. The extension covers petrol, diesel, and heating oil, maintaining the reduced rates at €0.33 per litre for unleaded petrol and €0.30 per litre for diesel, significantly lower than the standard EU minimum rates. The Ministry emphasized that the decision was driven by persistent volatility in international oil markets, the need to support the tourism sector during the shoulder season, and the broader objective of protecting household purchasing power amid elevated inflation. The revenue foregone is estimated at approximately €15 million for the two-month extension period, a figure incorporated into the 2026 fiscal outlook without necessitating a supplementary budget. The measure will be formally notified to the EU as a temporary state aid compatible with the internal market.
Key Takeaways
- Extended Tax Relief Period: The reduced excise duty rates, originally scheduled to expire on 30 September 2026, will now remain effective through 30 November 2026, granting an additional two months of fiscal relief for consumers, hauliers, and the tourism industry.
- Budgetary Impact Absorbed: The estimated €15 million reduction in excise revenue has been accounted for within the existing 2026 budget framework, avoiding the need for immediate offsetting tax increases or spending cuts, and aligns with the medium-term fiscal strategy targets.
- EU Compliance and Notification: The extension leverages the derogation clauses in the EU Energy Taxation Directive for exceptional circumstances; Cyprus will submit a formal notification to the European Commission detailing the measure’s scope, duration, and estimated budgetary effect.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement