Cyprus to be granted extension for the use of reduced VAT rates on certain services
The Council of the European Union at a meeting of the Economic and Financial Affairs Council, in Brussels, on 4th December 2007, agreed to exted the temporary derogations that currently allow five member states including Cyprus to apply reduced VAT rates on certain services. This is subject to favourable opinion of the European Parliament, on a draft directvie aimed at the above.
The directive will allow Cyprus to apply zero VAT rate to the supply of pharmaceuticals and most foodstuffs and a reduced rate of 5% to restaurant services, until 31 December 2010.
The above derogations which were introduced in the act of accession of Cyprus in 2004 would otherwise expire at the end of this year.
The directive will be adopted without discussion at a forthcoming Council meeting, once Parliament has submitted its opinion.
