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Consumers to benefit from zero VAT rate on essentials until October

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Consumers to benefit from zero VAT rate on essentials until October

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    Consumers in Cyprus will continue to benefit from a zero Value Added Tax (VAT) rate on eleven essential products for an additional three months.

    The Council of Ministers approved the extension yesterday, delaying the expiration date from June 30 to September 30, 2024.

    Products included:

    • Bread
    • Milk
    • Eggs
    • Baby food
    • Feminine hygiene products
    • Adult diapers
    • Sugar
    • Coffee
    • Meat
    • Vegetables

    This extension is expected to cost the government €11 million in lost revenue. However, the benefit will be passed on to consumers who won’t pay VAT on these household staples.

    Compared to the €6 million cost of the previous extension in April, this reflects an increase due to the wider range of products now included.

    Initially implemented in May 2023, the zero VAT rate has been gradually expanded with each extension.

    Inspections by the Consumer Protection Service found a positive impact on prices and inflation. Prices for roughly 70% of the affected products have remained stable since the initial implementation in May 2023.

    Compliance with the zero VAT rate has been generally good, with deviations ranging from 70% to 100% for some products and slightly lower for others.

    This extension is part of a broader €23 million package aimed at mitigating inflation. The government has approved a total of €314 million in anti-inflation measures since taking office.

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