Skopje, 7 October 2023 (MIA) - Prime Minister Dimitar Kovachevski said Saturday that the country has the lowest VAT in the region and the food products whose prices have increased continue to have a preferential VAT rate - below the basic rate of 18 percent. 

Kovachevski noted that the list of the products has been prepared by top tax and financial experts, adding that it comes as part of the country's tax reform, which was best confirmed with today's affirmation of North Macedonia's credit rating in times of crisis.   

"The list of products with a preferential VAT rate of 5 percent has been reviewed in detail, and includes 1,600 products that are mostly used by the citizens daily," Kovachevski told reporters at the Tradition National Food and Beverage Fair in Skopje's City Park on Saturday.  

"Our country has the lowest VAT compared to all the countries in the region, and if you compare it with all the countries in the EU, it is also the lowest. We have a basic VAT rate of 18 percent, Serbia has 20 percent, Croatia has 25 percent, Greece has 21 percent, Albania has 20 percent, which means they all have a higher basic tax rate than ours. Second, when we look at the list of products taxed at a preferential VAT rate of 5 percent, it includes 1,600 products that represent basic food items in our country. It is also the largest list of products taxed at a preferential VAT rate of 5 percent, which are used in our households and by our citizens," said Kovachevski. 

According to him, it is a speculation that the price of flour will increase from 5 to 10 percent, as well as that of cheese produced in the country.

"We have guaranteed prices, which also remain at a rate of five percent. What has been done is really done in a way that protects the standard of citizens," Kovachevski said.

He noted that inflation data show that prices will certainly drop next week, given that there will be no increase in the price of electricity, the price of heating, the price of food products, as measures have been adopted to reduce price of up to 30, 40 percent for basic food products labelled with a guaranteed price, and there is no selectivity in the implementation of such measures. 

"Thus, I believe that by the end of the year we will reach what we projected and what we said - five percent inflation, which will be at the level of one of the lowest in the region and in Europe," said Kovachevski.

According to him, the list could be reviewed for only two to three products that are now taxed at 10 percent under the latest decision, products that are used on daily basis, because there really are 1,600 products. 

He noted that in addition to products in the food industry, the list also includes products related to food production. Thus, artificial fertilizers and other seed materials are also set at a 5 percent preferential rate, as well as agricultural mechanization.  

Kovachevski noted that the tax reform has also been harmonized with the International Monetary Fund and the World Bank.