The Cyprus Chamber of Commerce and Industry (CCCI) has sounded the alarm over a European Commission proposal to sharply increase taxes on cigarettes and tobacco products, warning that such measures do not reduce consumption but instead drive the market toward illicit trade.

According to CCCI data for 2024, 14% of cigarettes and 53% of loose tobacco in Cyprus are traded illegally, costing the state at least €44 million in lost tax revenue—funds that could otherwise support health, education, and social welfare programmes.

Sources from Brief report that the CCCI has evidence showing that repeated tax increases since 2013 have already led to the closure of more than 600 kiosks, many of them small, family-run businesses that once served local communities and operated legally.

“Every new tax burden on tobacco products translates directly into a boost for smuggling,” the Chamber stresses.

>>Bad News for Cyprus Smokers: Big Tobacco Price Increase on the Table<<

The CCCI argues that overtaxing legal tobacco only strengthens the black market and undermines legitimate retailers, while failing to achieve public health goals.

The Chamber also voiced concern about the proposed tax hikes on e-cigarettes, heated tobacco products, and nicotine pouches, which are currently taxed at much lower rates but could face significant increases under the new EU directive.

Industry representatives warn that abrupt price jumps on these alternatives could similarly push consumers toward unregulated products, with serious implications for both public health and tax collection.

The CCCI is calling on the Cypriot government to make use of the flexibility clause in the forthcoming EU directive by submitting a well-documented request for an extension of the transitional period.

Given Cyprus’ unique circumstances, particularly the large inflow of illicit products through the Green Line, the Chamber argues that gradual implementation of tax increases is essential to ensure effective enforcement and market stability.