11 April 2024

Green Tax Reform - Recent Developments

KPMG in Cyprus


KPMG has been operating in Cyprus since 1948 and currently employs more than 800 professionals working from 6 offices across the island. It is a member of KPMG International Limited, a global organisation of independent professional services firms providing Audit, Tax and Advisory services. KPMG operates in 143 countries and territories and has approximately 273,000 people working in member firms around the world. Clients look to KPMG for a consistent standard of service based on high-order professional capabilities, industry insight, local knowledge and expertise.
In the context of achieving the objectives of the European Green Deal, the Ministry of Finance proposed two new bills which might come into effect as early as April 2024.
Cyprus Energy and Natural Resources
To print this article, all you need is to be registered or login on

In the context of achieving the objectives of the European Green Deal, the Ministry of Finance proposed two new bills which might come into effect as early as April 2024.

The main points of the proposed reforms include:

1. Introduction of carbon tax on energy products

It provides for the imposition of carbon tax of a predetermined amount, subject to certain exceptions:

(a) on stocks of energy products already under consumption which are stored in petroleum stations or are held by petroleum resellers and petroleum companies.

(b) on carbon emissions emitted by polluting industries.

Among the affected products gasoline, gas oil used as motor fuel, as well as certain categories of lighting oil (kerosene) and LPG are included.

The carbon tax will be imposed on energy products even if they are exempted from the imposition of excise duties. It is noted that VAT will apply on the value of products subject to carbon tax.

2. Introduction of accommodation Tax

The bill provides for the imposition of a daily accommodation fee of €2,50 which will be charged to every resident when using a room or accommodation or living space in hotel units, tourist accommodation and self-catering units in the Republic.

No VAT will be imposed on the accommodation fee.

Entry into force of the bills

Both bills might come into effect as from April 1st of this year. We therefore need to wait for the outcome of the public consultation, following which the individual provisions of the bills will be clarified together with their exact enforcement date.

Proposal for an increase in unified water management fees

In addition to the above, the Water Development Department, as part of the consultation process with stakeholders regarding the Green Tax Reform and Water Taxation, prepared an amended proposal for the Unified Water Management (Rights, Fees, or other Financial Considerations) Regulations of 2017 to 2023. More precisely, referring to potable water the proposal focuses on the increase of the currently applicable fee by €0.01/m3 plus VAT.

How can KPMG assist?

Should you need any assistance regarding the individual provisions of the two aforementioned bills being put forward for approval in the context of the implementation of the green tax reform in the Republic, please contact one of our trusted advisors from the Indirect Tax Department at KPMG Cyprus.

KPMG's Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company's current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More