Cyprus businesses warned over tax receipt compliance

Cyprus’ Tax Department is preparing a wave of extensive inspections in businesses operating in coastal areas during July and August, as part of measures introduced under the government’s tax reform programme aimed at tackling tax evasion.

According to a report released on Tuesday by Philenews, the inspections will primarily target businesses whose activity peaks during the summer season and which are located in areas attracting large numbers of tourists.

Companies found to be violating tax legislation could see their premises sealed until their owners comply with the law.

The checks will focus on two fronts, namely outstanding tax debts and the issuance of receipts.

Under the new legal framework, which came into force on January 1, 2026, businesses, legal entities and individuals with tax debts exceeding €20,000, as well as companies failing to issue receipts, may be subject to temporary closure.

The Tax Department’s campaign will begin with checks related to the issuance of receipts, the report added.

The inspections will be conducted on site and will be based on a model previously used in Greece.

The department has already completed the necessary preparations and drawn up a list of businesses that will be targeted.

What is more, procedures and operational guidelines for tax officers have also been established.

The Cypriot newspaper, citing information it has received, reported that tax officials will position themselves outside businesses and randomly select customers leaving the premises.

Customers will be asked to present the receipts they received and officials will also examine the products they purchased.

If inspectors determine that receipts were not issued or were inaccurate, they will enter the business premises and request the relevant documentation.

Officials will simultaneously compare the information and receipts obtained from businesses with those collected from customers.

The verification process will also make use of tablets provided to the Tax Department, while the necessary software connections and technical arrangements have already been put in place.

Customers who purchase products from businesses that fail to issue receipts will not face any consequences, as responsibility lies with the companies themselves.

According to the legislation, the measure of sealing premises can be activated in cases involving the failure to issue invoices and receipts, the issuance of inaccurate invoices and receipts, or attempts by taxpayers to obstruct tax officials during inspections.

A second target of the campaign will initially be 500 businesses with tax debts exceeding €1 million.

These include, among others, betting companies, supermarkets, yacht sales businesses and car dealerships.

Although the new law allows businesses with debts exceeding €20,000 to be sealed, authorities are initially focusing on the largest debtors.

In both cases, businesses will receive three warnings and a total compliance period of 25 days.

Once a violation is detected, companies will receive a first warning and will have ten days to take corrective measures.

If they fail to respond, a second notice will be issued granting another ten days. A third and final warning will provide an additional five days.

Should the business still fail to comply, its premises will be sealed.

The closure will be lifted once compliance has been achieved and a relevant certificate has been issued by the Tax Commissioner.

If taxpayers continue to ignore their obligations, the commissioner will have the authority to seal the premises for a period of up to 20 days.

It is also envisaged that from 2027, businesses may be closed for failing to submit tax returns, VAT returns and declarations relating to withheld taxes and contributions.

Although this provision is already included in the legislation, its implementation has been suspended for one year in order to give taxpayers the opportunity to regularise their affairs.