The government yesterday approved a €100 million package of eight measures to counter the economic impact of the US-led war against Iran, covering energy costs, food prices, tourism support and farming subsidies — on top of €100 million already in place.
The Council of Ministers approved the package on Wednesday. Several of the measures were previously deployed during the Covid pandemic and the Ukraine war.
Energy costs
VAT on electricity will be cut to 5% for all domestic consumers from 1 May 2026 to 31 March 2027, benefiting an additional 360,000 households at a fiscal cost of €14.3 million. The existing electricity price subsidy for vulnerable consumers and selected businesses will also be extended to cover low-pension recipients and single-parent families receiving the single-parent allowance — an additional 22,200 and 10,700 households respectively.
The excise duty on motor fuels will be reduced by 8.33 cents per litre for April, May and June 2026, at a cost of €18.6 million. Although originally announced as taking effect from 1 April, the measure requires parliamentary approval and will now take effect after 3 April, with the bill to be voted on at the next plenary session on 2 April.
The green tax on fuels — which would have added 9 cents per litre — will not be imposed. The tax had been required since 2022 under a Recovery Plan commitment; non-compliance will cost Cyprus €23 million in EU funds. The state had expected to collect around €95 million from the tax over three quarters.
Consumer protection
Meat, poultry and fish will be added to the zero VAT list from 1 April to 30 September 2026, joining fruit and vegetables already exempt. The fiscal cost is estimated at €6.4 million.
Tourism
The government will subsidise 30% of wages for workers in hotels and tourist accommodation that operate during April 2026. An estimated 19,000 workers will benefit at a cost of €6.4 million, of whom around 15,000 are hotel employees at a cost of approximately €4 million. The measure is aimed at encouraging hotels to reopen in April. A further scheme to support airlines in maintaining connectivity to key tourist source markets will also be implemented.
Farmers
Two subsidy schemes covering 15% of the cost of fertilisers and other agricultural inputs will run in April and May, at a combined cost of €1 million. An estimated 3,000 farmers are expected to benefit, with a registration deadline of 31 May. Currently 1,400 professional farmers are registered, but social insurance data shows 3,000 people working in the primary sector.
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