Cyprus VAT receipts decline 3.8% in April

Indirect tax receipts for April ’09 contracted by 5.7%, whilst receipts for the period January – April 2009 were 4.7% lower at EUR 756 mln according to the Department of Customs and Excise. VAT receipts, which constitute the biggest part of indirect taxes receipts (c.75-80% of the total) recorded a 3.8% decrease to EUR 584 mln in the first four months of the year, a clear indication of a weakening private consumption demand. Excise duties receipts were slashed by a 22.4% to EUR 14.3 mln amid lower import demand, whilst at the same time indirect tax receipts on cars plummeted by 18.3% in the first four months to EUR 35 mln as a result of the drastic reduction in demand for motor vehicles (for first three months of the year total registration of motor vehicle were down by 21.3% yoy).
Despite the positive picture presented in February attributed to the Christmas sales period, the above data is a clear indication for a deteriorating primarily in consumption demand, which is the biggest component of GDP, note Marfin CLR analysts. The above would also burden fiscal economics as indirect taxes receipts constitute c. 50% of total government receipts.