VAT on pharmaceuticals to rise to 8% over 2011-2013

2010-08-04

The government on 3 August approved a one percentage point rise in the VAT on pharmaceuticals, to 8% from 7%, effective from 2011. The increase, coming as part of a wider financial reform package envisaging (small) VAT rises for most categories of goods and services, is meant as a temporary one, to apply over the three years to the end of 2013. However, the government does not rule out a further one-point increase in July 2011 and another one in July 2012 (which would bring the rate on medicines to 10%), depending on the fiscal situation, although this scenario is considered as rather unlikely. The increases are designed to bring the country’s budget deficit back down below 3% of GDP and keep public debt below 55% of GDP.