Finance ministry monitors fuel price increases amid Middle East conflict

Nicosia, Cyprus. The finance ministry is monitoring fuel price increases in recent weeks amid developments in the Middle East conflict, spokesman Michalis Papadopoulos said on Friday.

Potential measures

Papadopoulos said the government would take the necessary measures when it considers them necessary, as it has done previously.

He highlighted the 8.33-cent reduction in fuel consumption tax, which was extended last week until the end of November.

A possible tool available to the government could be a temporary reduction in value added tax on fuel.

EU rules on VAT

A European Commission spokesman had previously told the Cyprus Mail that reducing VAT on fuel would not comply with European Union law.

“While we fully understand the need to support citizens during these difficult times, it is important to note that the EU VAT directive does not provide for the possibility to apply a reduced rate on supplies of fuel,” the spokesman said.

Developments in Germany and Greece

German Economy Minister Katherina Reiche said on Wednesday that a temporary reduction in VAT on fuel would be “sensible” amid rising costs.

Speaking on the sidelines of a G20 energy ministers’ meeting in the United States, she said such a measure could address the burden directly at petrol pumps and take effect immediately upon introduction.

As recently as May, the German government had ruled out the prospect after Spain and Poland unilaterally reduced their VAT rates on fuel. The idea is now being revisited as prices continue to rise and German Chancellor Friedrich Merz faces calls to resign.

Greek Prime Minister Kyriakos Mitsotakis also discussed fuel prices on Thursday night. While not explicitly referring to VAT rates on fuel, he said “it is clear that the Greek reaction alone is not enough”.

Competition concerns

Sizopoulos had decried “unfair competition” from Turkish Cypriots.