No VAT Reduction on Food in 2013 - Bulgarian Minister

Agriculture Minister Miroslav Naydenov has highlighted the benefits of the decision of the Bulgarian government to refrain from increasing VAT on food. Photo by BGNES

Agriculture Minister Miroslav Naydenov has boasted that the Bulgarian government "resisted the temptation" to increase VAT on food products, unlike the neighboring countries.

In a Thursday interview for the morning broadcast of Nova TV, he opposed calls for a reduction of VAT on food products.

To illustrate his point, Naydenov argued that the VAT rate in Romania was 24% and Greece had similar rates.

However, an inquiry into the VAT rates in the EU as stated in a report of the European Commission by July 1, 2012 shows that the VAT rate in Greece is 23%, with two exceptions - food products (13%) and hotelier business (6.5%).

The data, as cited by business news portal investor.bg, shows that most EU countries have differentiated VAT rates and the majority of them have introduced lower VAT rates on food, pharmaceuticals, and books.

Hungary has the highest VAT rate, at 27%, but it also applies differentiated VAT rates.

In Denmark there are no exceptions and all goods are subject to 25% VAT.

According to the review of EU VAT rates, the only exception approved by Bulgaria applies to hotelier business, which is subject to 9% VAT, rather than 20%.

Value Added Tax (VAT) is mandatory for the entire EU and the minimum rate is 15%.

Lower VAT rates can only be introduced with the permission of the EC.

In his Thursday interview, Bulgaria's Agriculture Minister also commented on forecasts about a dramatic increase in bread prices.

A few days ago, the National Association of Grain Producers warned that bread prices could reach BGN 2 per piece due to the bad harvest and the unfavorable climate conditions for autumn crops.

Angel Vukadinov, Chair of the National Association of Grain Producers, explained that the Bulgarian government had not provided for direct payments per area for grain producers under Budget 2013, which was subsequently confirmed by Miroslav Naydenov.

Naydenov, however, opposed claims that bread prices would climb to BGN 2 as a result.

"There will be a price increase but it will be minimal, as much as the market can afford," Bulgaria's Agriculture Minister commented, adding that the biggest problem for producers was shrunken consumption.

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