In both Cyprus and Spain, the zero VAT measure on basic food items expires in June and there is discussion on extending it.
In Cyprus, the Government and the Minister of Finance, Makis Keravnos, have not yet decided on extending the zero VAT rate as internal evaluations are being carried out, and they have reserved their position on the matter.
In contrast, Spanish Prime Minister Pedro Sanchez stated in a television interview that his government will strive to continue the reduced VAT rate on essential food items after 30 June.
Spain had previously eliminated VAT on essential food items such as bread, cheese, milk, fruits, vegetables, and cereals, which were subject to a 4% rate, back in January 2023. This measure aimed to shield consumers from the impacts of soaring inflation.
Marios Antoniou, representing the Pancyprian Retail Trade Association (PASYLE), recently emphasised the retailers’ perspective that extending the zero VAT rate is necessary.
However, there are also opposing views that this measure reduces state revenues without ensuring that the benefit reaches consumers, as there is concern that suppliers or resellers may retain the savings instead of passing them on to customers.
