Inflation at 11.2% forces forth prolongation of reduced VAT rates on key supplies
Greece has announced a potential fourth extension of the temporary cut in the reduced Value Added Tax rate on certain goods from 24% to 13%. This latest extension is included in the 2023 Budget. This comes as inflation hits 11.2% in August.
The rate would not return to normal until 30 June 2023. At present, it is due to rise on 31 December 2022. The VAT cut was first implemented on 30 June 2020, and was designed to reverse in April 2021. It was since extended to 1 October 2021 and then 30 June 2022.
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The affected supplies are:
- coffee;
- transport;
- non-alcoholic drinks;
- cinemas;
- gyms and dance schools; and
- tourism packages.
The continuation of the tax subsidy, originally introduced due to the COVID-19 emergency, is now blamed on an expected rise in food and power costs amid higher international prices for transportation, raw materials and energy.
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