Paphos People

The zero VAT rate for basic necessities will be extended for a further another six months, while coffee and sugar have been added to the list of products, Finance Minister Makis Keravnos announced on Wednesday.

Speaking after the Council of Ministers meeting, he said the extension was granted as the current validity period ends at the end of October.

“We have decided to renew this list with the zero rate for basic products for another six months, and we have also added two more everyday use products, coffee, and sugar,” Keravnos said.

The measure was first introduced at the beginning of May in a bid to provide some relief from inflationary pressures.

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

When asked if the government is considering subsidising electricity and fuel as costs continue to rise at the pumps, he reiterated that the government’s policy focuses on implementing targeted measures.

These, he said, are “more effective and in line with the fiscal framework and fiscal discipline that our country must maintain.

“Beyond that, the government is showing that it is a people-centric one.

“We are closely monitoring all developments with great seriousness and sensitivity, and depending on the developments, the government will continue to take measures to alleviate those in need,” Keravnos said.

The council of minister also reduced the special defence contribution on interest income from 30 per cent to 17 per cent.

Keravnos said that the special contribution on interest income was at 15 per cent before the 2013 economic crisis and then doubled to 30 per cent.

“The fiscal impact of the reduction is estimated at €16 million,” he said, adding that the government’s decision aims to increase the income of middle-income households and medium-sized businesses with deposits.

“At a time when deposit interest rates remain low, we are sending a message by increasing the disposable income of depositors, and I hope that the government paves the way for others to follow,” he added, indirectly addressing commercial banks.

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