Macedonia: Lowered VAT for Baby Products, School Equipment and Cattle Food

Macedonia's Government has passed a decision to lower the value added tax (VAT) for baby products, school equipment, fodder and additives for use in cattle food and livestock.

Prime Minister Nikola Gruevski announced at a press conference Wednesday that the Government has approved the draft bill amending the Law on VAT, envisaging reduction in the tax rate of these products from 18 to 5%.

"The new law is expected to enter into force after the establishment of the new parliament structure and following its adoption in the Assembly, which is set to take place at the end of May or during the month of June. The fiscal implication that it will cause will be MKD 380 million annually, or half of it for this year, because there are six more months until the end of the year," Gruevski said.

The Prime Minister pointed that by reducing the VAT for these products, the tax that retailers pay will also be reduced, and thus, he expects lowering of prices for the ultimate consumers.

"This will help parents to lower costs for their children. With the amendments, we will additionally influence the prices for cattle food, as well as the price of livestock, which will contribute to the stimulus for agricultural production of meat and dairy products," Gruevski stressed.

Under the new law, product costs will be lowered directly and indirectly and companies' competitiveness will be improved.

"This could be a potential stimulus for increasing the export of these Macedonian products, but also an increase of product import competitiveness, because it will enable lower prices for end-users," Gruevski specified.

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