Filenews 3 December 2025 - by Eleftheria Paizanou
Despite the inclusion of safeguards in the bills for tax reform, lawyers and accountants continue to express strong reservations about the provision that provides for the sealing of business premises due to non-compliance of owners with their tax obligations, i.e. the non-issuance of legal receipts and the non-payment of taxes.
During the consultations that the Commissioner of Taxation, Sotiris Markides, had in the summer with the stakeholders, the controversial provision of the bill was differentiated, which will be discussed extensively on Friday in the Parliamentary Committee on Finance. According to the bill, the process that will precede the sealing includes three notices to the taxpayer, so that he has the opportunity to comply with his obligations or proceed with a settlement with the Tax Commissioner before the sealing of the premises.
The Cyprus Bar Association, in a note to the Parliament, requests the removal of this article, as it considers that the procedure is not legally correct and works to the detriment of businesses. On the other hand, the Institute of Certified Public Accountants of Cyprus (ICPAC) cites the provisions of the legislation, according to which the Tax Commissioner will be able to close the business and seal its premises initially for ten days and then renew the measure for another twenty. The reason will be the non-submission of tax returns for two years, the non-submission of twelve monthly employer returns, the non-payment of tax exceeding €20 thousand, the non-issuance of invoices and receipts, as well as the obstruction of the conduct of a tax audit. According to the bill, before sealing, the Registrar must have sent three notices by registered mail, with a ten-day deadline for compliance each time.
Applicable only in Greece and Bulgaria
According to accountants, in the European Union only Greece and Bulgaria implement such measures, which are targeted at indirect taxation (VAT) issues. They note that in Greece this measure has been applied since 2022 for violations of non-transmission of retail sales data to the information system of the tax electronic mechanisms of the Independent Authority for Public Revenue, while in Bulgaria it applies to VAT violations and not to direct taxation issues.
At the same time, they indicate that the VAT legislation already provides the possibility for the Tax Commissioner to proceed with an investigation of premises and persons and to request a decree for access to information. They also claim that issues of obstruction of control are not related to tax legislation.
Unjustified measure
According to accountants, the application of such extreme measures is not justified, especially in the case of taxpayers who prepare audited accounts to submit their tax return. They also say that the time frames of 10+10+5 days are not realistic to bring about compliance. "So the effect of the sealing will be that the taxpayer will not have access to his records to be able to comply. There are already many provisions for compliance issues (either for the submission of declarations or for collection), at the disposal of the Registrar", they conclude.
Deterrent measure
On the other hand, the Tax Department interprets the bill differently, arguing that the measure is necessary to protect public revenues and to prevent unfair competition against businesses that comply with their tax obligations. In an information document that he forwarded to the parties, he emphasizes that the implementation of the stamping also has a deterrent character, as it aims to prevent violations by taxpayers, strengthening the trust of consistent businesses in the fair and effective operation of the tax authority.
"The measure is effective in enhancing tax compliance because sealing is a visible measure by the public, customers and other businesses who see the Tax Department acting promptly and strictly, with no tolerance for the violation of tax obligations," the relevant department notes. In addition, he argues that the measure shows that those who break the law do not benefit at the expense of consistent businesses, restoring the sense of justice and promoting fair competition. This strengthens trust in legality and helps foster a culture of tax compliance," he concludes.
