Cypriot businesses that consistently violate tax laws may soon find their premises sealed for at least 48 hours under a new enforcement tool granted to the tax department, if parliament passes one of six pending tax reform bills set to take effect on January 1, 2026.

According to a report in Philenews, the bill introduces a strict measure enabling the tax department, with a court order and police assistance, to temporarily shut down companies that fail to meet tax obligations or obstruct tax audits.

The initiative draws inspiration from the Greek model, in use for years by the Independent Authority for Public Revenue (IAPR). 

According to the proposed amendment to the tax verification and collection act, business premises may be sealed when a court is convinced that the business operator repeatedly breaks the law and engages in serious violations.  

The measure targets those who either fail to issue invoices for at least three different transactions or for any single transaction exceeding €500, or deliberately issue inaccurate receipts.

In such cases, the judge will issue an order to suspend business operations and seal the premises for a 48-hour period.

Additionally, if tax department officers are prevented from conducting audits, either through threats or physical force, the court may also impose the sealing measure.

The order, which will be physically posted at the business entrance, will include the sealing’s start and end time, and indicate a fine equal to five times the value of unissued invoices or receipts.

Repeat violations will carry even heavier consequences. If a taxpayer fails to submit at least two tax returns, or three monthly tax and contribution withholding statements, or does not pay the corresponding tax amounts for at least two fiscal years, the court can extend the sealing.  

A follow-up request by an authorised officer can result in a new order to prolong the closure by seven more days, or until the taxpayer complies and clears their debt. 

Should the full amount of tax owed remain unpaid, the sealing order may be extended by an additional 48 hours at a time, repeating this cycle until the entire debt is settled.

To facilitate enforcement, the tax department will be allowed to enter the sealed premises for inspection during the suspension period.  

Meanwhile, the police may assist in serving the order, which must be personally delivered with proof of service.

The bill also outlines the hierarchy in which tax debts will be repaid. First, the collection costs, then charges on tax, followed by interest, and finally the principal tax and any penalties.

When refunds are due, the tax inspector will have the discretion to offset these against the taxpayer’s outstanding debts, starting from the oldest. 

Another key reform aims to improve transparency in property rental income. From 2026, any monthly rent exceeding €500 must be paid exclusively through electronic means, such as bank transfer, debit or credit card, or other approved methods, allowing the tax department to track payments and verify eligibility for tax deductions.

The reforms also include tax relief measures. The personal tax-free threshold will increase to €20,500, with an extra €1,000 deduction for each dependent child or student, plus a €1,500 allowance to cover interest on a housing loan or rent paid for a primary residence.

Moroever, in a separate bill, the tax department will be given powers to seize company shares as a guarantee for unpaid taxes.

If debts exceed €3,000 and remain unsettled for more than 30 days past the due date, shares may be frozen as collateral, marking another move in what authorities describe as a broader effort to combat tax evasion.