The Cypriot government has announced a further 2% VAT rise to 19% within the next two years.
The increase will come in two stages: 1% on 14th January 2013 and then a further 1% on 13th January 2014. It follows a 2% VAT rise in 2012 from 15% to 17%. The reduced VAT rate of 8% will rise to 9% on 1 January 2014, too. The will be no change to the 5% VAT rate on basic goods.
Cyprus has negotiated the VAT changes as part of the latest bail out by the 'Troika' of the European Union, European Central Bank and International Monetary Fund. The government had hoped to secure better loan terms from Russia.
Cyprus joins many other European countries being forced into steep consumption tax rises by the financial and Euro crisis. Cyprus has been hit by the Greek banking difficulties.