As a new, lower VAT rate took effect on 1 January, baby food prices have dropped throughout Czech supermarkets.
The Senate of the Czech Republic voted in favour of the reduced VAT rate in October 2014, introducing a third, 10 per cent value added tax rate in the country. Until January, there were two VAT rates in the Czech Republic, of 21 and 15 per cent. Books, baby food and drugs used to be included in the standard VAT, at 21 per cent, while food was and still is subject to a 15 per cent rate.
The results of the tax cut are already visible, as prices of baby food in large supermarket chains around the country, have already dropped. Tesco marketing director Olin Novak said that they already sell baby food for five per cent less. Baby food is bought regularly by some 350,000 costumers, she added.
Originally, babies’ nappies were also meant to be included in the lowest VAT group, but they were not included in the group of tax reduced items since the country was unlikely to get an exemption from European regulations, Czech Radio reported.
Reduced VAT rates are quite common in Europe. Fifteen EU member states, including Hungary, Belgium, France and Ireland, currently have two reduced VAT rates. The lower rate usually applies to books and medicines, Radio Prague notes.
© 2015 European Supermarket Magazine – your source for the latest retail news. Article written by László Juhász.
