Speaking to reporters after the Cabinet meeting yesterday, Finance Minister Takis Klerides stated that Cyprus’ request to the EU to sustain the VAT zero factor on basic goods has been accepted and will continue until 2009. This means that in view of Cyprus’ accession to the European Union, there will not be increases on food items despite the fact that VAT will rise from 10% to 13% and subsequently to 15% until accession. Mr. Klerides stated that this will lighten the burden of the lower-income groups.

Mr. Klerides further stated that consultations on tax reforms currently taking place will take into consideration the EU’s decision.