As of Monday the standard rate value added tax (VAT) in Cyprus increased by 1% to 19%, as part of a series of obligations, included in the €10 billion bailout the island agreed with its international lenders in March last year.
The standard rate covers approximately 80 per cent of goods and services whereas the reduced VAT rate covers restaurants, cafeteria and catering services.
Hotel services, transport of passengers and their luggage within Cyprus by urban, suburban and rural taxis as well as by tour and suburban buses also increased, from eight to nine per cent.
Residence taxed at five per cent VAT are not affected by the new measure.
Despite the VAT hike Cyprus continues to have the third lowest VAT rate in the European Union, following Malta with 18 per cent and Luxemburg with 15 per cent.