ECONOMY

Consumers, retailers confused by VAT shifts

consumers-retailers-confused-by-vat-shifts

The VAT changes that came into force in Greece on Thursday saw spaghetti placed in the 13 percent value-added tax bracket while its stuffed-pasta sibling tortellini incurred a 23 percent rate. Cereal grains stay in the 13 percent bracket, but boxed breakfast cereals climb to 23 percent. Salmon remains at 13 percent, but beef shifts to 23 percent. These and other unpleasant surprises await shoppers once all enterprises have managed to change the VAT rates on merchandise according to the government’s decisions.

The new VAT brackets became official on Thursday – but will apply as of Monday– as the law has been published in the Government Gazette, but supermarkets argue it will take at least five days for the changes to be made in their electronic pricing systems. The difficulty is not only in the sheer volume of the changes – some stores will have to change the rates in 20,000-30,000 product codes – but also in their peculiarities: All previous rate changes had applied universally, as the composition of the two main categories of retail products had not changed for many years – with the exception of refreshments in 2013. This is the first time there have been so many changes within those categories, while consumers will have to come to terms with the phenomenon of differing VAT rates between very similar commodities.

Supermarket chains and food stores are expecting the release of explanatory circulars from the Finance Ministry, as they see several gray areas in the text of the new law, passed in the early hours of yesterday. Up until yesterday afternoon, the ministry had issued just one circular on the application of the new VAT rates, concerning customs authorities.

Based on what is included in the law’s text, there are several strange cases in the separation of food commodities: Beef is the only meat in the 23 percent VAT bracket. Most forms of milk carry a 13 percent rate, but evaporated milk has 23 percent.

Some last-minute corrections on Wednesday averted oddities such as grated cheese having a 23 percent rate while a whole piece of the same type of cheese would have had a 13 percent rate.

Corn oil and other similar types of food oil that are cheaper than olive oil have been shifted to the 23 percent bracket, while olive oil remains at 13 percent. Likewise, sliced “toast” bread, crispbread and rusks jump to the 23 percent category, while traditional bread remains at 13 percent, although it is not clear which category some types – such as olive bread – fit into. With a little luck, the circulars to be issued will clear up such discrepancies.