List of consumer goods subject to reduced VAT to be ready within the fortnight

The list of consumer goods subject to reduced VAT – in some cases, zero per cent – should be ready within the next 14 days, the commerce minister said on Monday.

Speaking to the Alpha television channel, George Papanastasiou said his ministry has already drawn up a preliminary list of consumer goods, which it has forwarded to the finance ministry for review and approval.

The final list should be announced within the fortnight.

The commerce ministry proposes to cut VAT from 19 per cent to 5 per cent on certain items, and from 5 per cent to zero per cent on others.

Such items would include milk, bread, baby foods, diapers, as well as other similar consumer products.

Papanastasiou said some of the items would need the nod from the finance ministry in Cyprus, while others will need approval from both the finance ministry and the European Commission in Brussels.

The minister said the measure would apply according to market needs, that is, it would remain in force “as long as conditions necessitate providing support to consumers, without having to renew the measure every two months, as is the case with the consumption tax on fuel.”

He explained that the official order to slash VAT on these consumer items will be done via a public statement issued by the finance minister, not via a ministerial decree.

On electricity, Papanastasiou said the commerce and energy ministry is currently drawing up proposals leading to a reduction in the cost of generation, so that this is then transferred onto end-users.

“It is a series of measures which in the coming days we’ll be discussing with the finance ministry and with the energy regulator, who would give the green light,” he noted.

Earlier this month, in another bid to provide some relief to consumers from inflationary pressures, the government decided to extend by another two months the subsidising of electricity bills.

The government also approved a new two-month reduced excise tax rate on motor and heating fuels, corresponding to half of the previously approved rate reduction. This reduction will amount to 4.16 cents on motor fuels, such as petrol and diesel, and 3.19 cents on heating fuel.