More items to get zero VAT

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The government will add more commodities to a list of essential products carrying zero VAT to ease the cost-of-living crisis.

Two weeks after introducing the first list of items with zero VAT, the Finance Ministry is preparing a second list, according to news site Stockwatch quoting government sources.

According to the news site, the ministry’s technocrats will suggest adding consumer goods such as rice, pasta, olive oil and legumes, for which the European Commission allows states to reduce VAT.

The products currently carry a reduced 5% VAT instead of 19%.

Reportedly, items such as toilet paper and personal hygiene products like soaps and toothpaste will not be added to the list. This is because Brussels has not included them as essential commodities for which VAT can be removed.

These products currently carry a standard 19% VAT.

According to the report, the Finance Ministry is also looking into whether it could remove VAT from essential services, such as public transport, which are currently burdened with a 19% VAT.

As of 5 May, consumers have been paying zero VAT on some essential commodities as the government tries to relieve households from ongoing inflationary pressures.

The measure will be valid for the next six months.

According to a Cabinet decree, the following items carry zero VAT:

  • Bread: all types of bread, fresh or frozen, with or without sourdough (e.g., white, black, wholemeal, multigrain, rustic, rye, cornbread, baguettes, ciabatta, sliced bread, pitta bread).
  • Milk: fresh milk (e.g., cow, goat, sheep), sweetened, condensed, long-life, flavoured (e.g., chocolate, banana), non-dairy milk (e.g. almond, soya, rice).
  • Baby food: powdered, dry and/or liquid food intended for consumption by children.
  • Children’s diapers.
  • Adult incontinence products.
  • Menstrual hygiene products (tampons, sanitary towels).

In comments to Stockwatch, Finance Minister Makis Keravnos expressed his satisfaction with the first package, which “contributed to holding prices down”.

He said the goal was to have the second package of zero VAT items approved by the Parliament and go live within June.

Meanwhile, according to Eurostat, harmonised inflation in Cyprus in April dropped to its lowest since September 2021.

Harmonised inflation was 3.9% in April, down from March’s 6.1%.

Inflation has dipped from a 10.9% record high in July last year.