On 12 March 2024 the Finance Ministry annnounced there will be no extending of the life of the VAT zero rate for basic foodstuffs, such as fruit, vegetables, meats, dairy products and cereals.
Basic foodstuffs and certain beverages have been zero rated since 1 February 2022 as part of governmental measures collectively called Anti-Inflation Shield 2.0. The specific legislation that introduced the zero rate was the Finance Minister regulation of 9 December 2023 on the reduced rates of the goods and services tax. According to the regulation, the measure will be in force until 31 March 2024.
Now that the reduced VAT rate on basic foodstuffs is not going to be kept, they will become subject to the 5% rate again as of 1 April 2024.
However, 1 April 2024 will also see a reduction to 8% of the VAT rate on certain beauty services. In accordance with the relevant amending regulation of the Finance Minister dated 21 February 2024, the reduced 8% rate will apply to such services as make-up, manicure, pedicure, and brow & eyelash stylist services. But the lower rate will not apply to such services as tattooing, piercing or massage. The proposed regulation was submitted for review by the Legal Committee on 12 March 2024.
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