Prolonged zero VAT on food to save Poles over EUR 1 billion

Zero VAT on basic foodstuffs that he government has decided to maintain for the second half of this year will keep over PLN 5 billion (EUR 1.12 bln) in the pockets of Poles, the finance minister has said.

On Monday, Prime Minister Mateusz Morawiecki announced that the zero VAT rate on basic foods will be extended until the end of 2023.

The Ministry of Finance said in Tuesday's announcement that the reduction to 0 percent in the VAT rate on food has been in force since February 1, 2022. Previously, it was taxed at 5 percent.

"In the fight against inflation and the crisis caused by Russia, the most important thing is to protect the wallets of Poles," the ministry said.

Magdalena Rzeczkowska, quoted in the report, pointed out that thanks to the introduction of a zero VAT rate on basic foodstuffs Poles saved more than PLN 8.5 billion (EUR 1.91 bln) in 2022.

"In the first half of 2023, it is about PLN 6 billion (EUR 1.35 bln)," Rzeczkowska said. "We estimate that in the second half of 2023 it will bring further savings of over PLN 5 billion (EUR 1.12 bln)."

The zero VAT rate on food was an element of the second Anti-Inflation Shield, under which VAT rates on fuels and electricity were also reduced. Tax cuts related to energy carriers expired at the end of 2022, but the preferential tax rate on food was extended until June 2023.