10th October 2023, Skopje – At today’s governmental session, amendment wad adopted, pertaining to the Decision on Determining the Goods and the Services subject to VAT Preferential Rate, adopted at 28th September 2023, thus additionally regulating few tariff rates, causing dilemmas as regards the 5% preferential rate application, due to the large number of products under the same tariff heading.
As per this amendment, cottage cheese, frozen dough, red pepper, baby porridges, baby formulas, nutritional supplements for weakened immune system, herbal teas, wafers and waffles, vegetable cheese, other certain types of yellow cheese, lutenica (slightly hot paprika and tomato spread) and canned beets and pepperoni, are products that will be taxed at a preferential VAT rate of 5%.
Moreover, this Decision provides for supporting the domestic economy, i.e. the domestic companies producing some of these products, as well as safeguarding the living standard of the citizens.
Amendments, the Government adopted at today’s session, will be applied from 13th October 2023.
Ministry of Finance and the Government are, during the policy making process and the application thereof, in continuous communication with the business community, being open for suggestions and proposals. Process of determining this Decision was transparent and inclusive, during which, 9 month ago, more precisely in January, list of products to be taxed with VAT preferential rate was shared with the chambers of commerce’ representatives, so they could submit their proposals thereon. Decision was adopted at the Government’s session on 28th September, entering into force on 2nd October, however due to the identified inconsistencies in the application of some of the products, a need arose to amend the Decision, which was made in the shortest possible time.
Republic of North Macedonia remains to be a country with the lowest VAT tax rates (regular and preferential), whereby the overall human food will continue to be taxed at a preferential VAT rate, whereby most of them are taxed at a lower preferential rate of 5%. In other words, the lowest VAT preferential rate in this country, is applied to over 1650 food products, whereby around other 950 additional food products will also be taxed with a preferential rate.
Decisions on applying VAT preferential rate arose from the amendments to the Law on Value Added Tax, all to the end of safeguarding the living standard of the citizens, protecting the health of citizens, and taxing the food products with fair tax rate. In addition, the adopted legal modifications and amendments to the Law on Value Added Tax provided for harmonizing other areas with the EU VAT Directive.