The finance ministry is in the final stages of preparing the list of products for which it is seeking reduced rates of VAT to ease the cost-of-living challenges.

Indeed, the government is seeking to introduce a new VAT bracket of three per cent – a move which daily Phileleftheros said is being viewed positively by the EU Commission.

Currently, the VAT rates are set at zero, five per cent and 19 per cent.

Most food products incur a five per cent VAT charge but the government is seeking to instead set the rate to three per cent, while some items are being considered to be placed in the zero per cent bracket.

The move will require the government to pass the matter through parliament, with the aim being that the revised VAT rates will be valid for six months – with the possibility for renewal.

Early last month, the cabinet approved a zero VAT rate on a range of goods such as bread, milks, eggs, baby foods, diapers, and female hygiene products.

“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 at the time.

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