Stores obliged to make a stock count on zero VAT goods

Stores will be required to carry out stock counts on the zero VAT consumer goods, the finance ministry said ahead of the introduction of VAT reductions on Friday.

Cabinet on Tuesday approved a decision to axe VAT on a list of essential items such as bread, milk and eggs, in a bid to provide some relief to consumers from inflationary pressures.

The goods concerned were sold with 5 or 19 per cent VAT.

However, the consumer association has warned that this might not reflect a reduction in prices as enterprises can increase the selling price.

Under the decision, as published on the official website tax department website, the zero VAT will apply to all types of bread, fresh or frozen, with or without sourdough. This includes white, black, wholemeal, multigrain, rustic, rye, cornbread, cornbread, baguette, ciabatta, bread in fritters, loaves of bread and pizzas. But it excludes bakery products, dried bread and any bread with added ingredients such as raisins, nuts, flavourings.

As for the milk, zero VAT will include both fresh, long-life and plant based. Specifically, it concerns fresh milk such as cow’s, goat’s, and sheep’s as well as sweetened, condensed, long-life, flavoured milk and vegetable milk made from almonds, soya, or rice.

Eggs and baby food such as powdered, dry or liquid food intended for consumption by children will also be sold on zero VAT as of Friday. The decision does not include snacks, including among others crisps, nuts, sweets, chocolates, and ice cream.

Children’s nappies and adult diapers are also in the list, as well as products for feminine hygiene protection such as tampons, sanitary towels and incontinence pads. Those products had the highest VAT percentage.

Under the VAT Law, companies are obliged to make a stock count of the goods in question, the tax department has noted.

Meanwhile, the general secretary of the retail trade association Marios Antoniou told CyBC Radio Trito on Thursday that competent staff from the consumer protection service have been carrying checks on the market in the past two weeks to make sure a reduction on the VAT is observed.

For his part, consumer association head Marios Droushiotis said on Wednesday that a reduction in VAT does not mean a reduction in the retail price of goods, as it will only show on receipts. This means that for the goods where zero VAT was agreed, receipts will not include the VAT rate at the bottom.

“On the other hand, retailers do have the right to raise the prices of these goods, it’s not illegal,” he said, adding that this means that prices may not necessarily change, despite the VAT reduction.

“For example, if milk costs €2 and must be lowered by 5 per cent, which amounts to 10 cents, some businesses may increase the price of milk by 10 cents, so consumers will see no change in price,” he said.

Reduced VAT is a temporary measure and will apply until October 31, 2023. The cost of implementing these measures is expected to be around €11 million.