North Macedonia government sends changes to VAT law to parliament

According to its worst-case scenario, CPB predicted purchasing power will fall by 3.4% with a 6% inflation rate. [Peggy cci / Pixabay]

The government on Thursday sent amendments to the Law on Value Added Tax and Law on Excise Tax to the Parliament, noting they should be adopted quickly to ensure a decrease of retail prices of fuels and oil derivatives.

North Macedonia’s government said it would remove VAT on basic food products and reduce VAT and lower excise duties on fuels within a set of measures worth €400 million, of which €90m are waivers of revenues, and about €310m are direct fiscal expenditures. The aim is to safeguard the living standards of its citizens and ensure the liquidity of local companies amid the global energy and food crisis.

There are enough food and fuel reserves to meet the country’s needs, but the prices of these goods are very high on the global markets, and the measures are expected to mitigate these price increases, Prime Minister Dimitar Kovačevski said in a statement on Wednesday.

Under the package, the government will remove VAT and freeze margins on sales of bread, sugar, flour, edible sunflower oil, milk, meat, rice and eggs. Currently, VAT on these food products is 5%.

The government will also remove customs duties on all imports of basic food products and scrap VAT on imported natural gas, electricity, thermal and cooling energy. VAT on fuels will be lowered to 10% from 18%.

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