Cabinet approves zero VAT on basic items

The cabinet on Tuesday approved zero VAT on certain consumer goods, in a stated bid to provide some relief amid current inflationary pressures.

The zero VAT will apply to bread, milk, eggs, baby foods, baby and adult diapers, as well as female hygiene products.

The measure will come into effect after the relevant issuing of a decree by the finance minister.

The move is temporary, and will apply from the date of publication of the decree until October 31 this year.

“The measures are aimed at relieving households which face higher prices for essential products, brought about by external factors caused by the increases globally and the constant crises afflicting economies and adversely impacting supply chains,” a finance ministry statement said.

The fiscal cost to the state from no VAT receipts would come to approximately €11 million, the statement added.

Last month the government decided to extend by another two months the subsidising of electricity bills.

At the same time the government approved a new two-month reduced excise tax rate on motor and heating fuels.