Cyprus’ economy is projected to maintain its resilience in 2025, with an anticipated growth rate of 3.1 per cent – significantly higher than the EU average – Finance Minister Makis Keravnos said on Friday.

Speaking at the Safe VAT Forum in Nicosia, Keravnos highlighted the strong economic performance in 2024, including a decline in unemployment to near full employment levels and inflation easing to approximately 2 per cent.

The finance minister said VAT revenue amounted to 47 per cent of total tax revenue.

He added that the digitalisation of the Tax Department, combined with the tax reform, would contribute to the already very positive results of the Cypriot economy.

Keravnos said the implementation of the new digital system Tax For All had been a catalyst in increasing compliance, due to the digital services provided to the taxpayers.

He added that the system had also contributed to the increase in VAT revenue.

Discussing tax reform efforts, Keravnos emphasised the government’s commitment to modernising the tax system to enhance competitiveness while aligning with the EU’s digital and green agenda. The reforms aim to combat tax evasion and avoidance, simplify tax procedures, reduce administrative burdens and uphold transparency and fairness.

Keravos said the economy’s growth rate accelerated in 2024, while the labour market saw a further decline in the unemployment rate, approaching near full employment. He also said that inflation continued its downward trend, approaching the 2 per cent level.

In terms of public finances, Cyprus was among the best performing EU countries, the minister said.

“Through good fiscal management, Cyprus has high primary surpluses and is projected to continue on the same path in the coming years, which will lead to a significant reduction in public debt as a percentage of GDP. This remarkable performance of the economy is also confirmed by the ratings and decisions of the credit Rating agencies, as during this administration we have had a total of eight upgrades from all the credit rating agencies,” he said.

Looking ahead to 2025, Keravnos expressed confidence that the economy would remain robust, with the projected growth rate of 3.1 per cent exceeding EU averages.

At the same event, assistant commissioner of taxation Ioannis Zevlaris said the total revenue of the Tax Department recorded a 10 per cent increase from January till October 2024 compared to the corresponding period of 2023.

Zevlaris noted that for the first time in 2022, the department’s revenue surpassed €6 billion, reaching €6.7 billion in 2023 and expected to exceed €7 billion in 2024.

He also praised the Tax for All system, which since its introduction in March 2023 has facilitated the collection of €4.7 billion in VAT, processed approximately 150,000 refund requests, and issued €830 million in VAT refunds.

The forum, held at the European University, discussed ‘VAT of today and tomorrow: challenges and applications in the era of the 4th industrial revolution’.