Montenegrin government supports proposal to abolish VAT on bread

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The Government of Montenegro has supported a draft on amendments to the Law on Value Added Tax, submitted to the Assembly by Social Democrat MPs, which stipulates that the sale of bread should be taxed at a rate of zero percent, and imports exempt from VAT until the end years.

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The explanation for the temporary abolition of VAT on bread and imports states that Russia's aggression against Ukraine has had a very negative impact on economic developments in Europe, on the (in)stability of the market and rising prices, especially of basic foodstuffs, reports the CdM portal.

"The consequences of such negative economic tendencies are very present in Montenegro, as a small, open and highly import-dependent economy, which resulted in a drastic increase in prices of certain food products, which in some cases went up to 75 percent, while a similar trend is expected in in the coming period," said the explanation.

It is added that, according to statements from the bakery industry, the recent reduction of the VAT rate on flour, cooking oil and salt will not affect the price of bread, since the costs to bakers have remained essentially the same as they will not pay VAT on flour but they will not be entitled to VAT refunds, while vendors will have the same costs as before.

"That is why the only sustainable way to reduce the price of bread is to reduce the VAT rate on bread from 7 to zero percent," said SD deputies, whose proposal is supported by the government.

(Telegraf Biznis)