Economy Minister on Applying Reduced VAT Rate to Gas Supply

By 18 January 2022

January 18, 2022 - Economy Minister Tomislav Ćorić said on Monday that applying a reduced VAT rate to the natural gas supply would definitely make the anticipated increase in gas prices as of 1 April lower, and he also believes that prices of oil products will stabilise at a lower level in the months to come.

Asked how the government would respond to the anticipated increase in gas prices, Ćorić said in an interview with the central news broadcast on Croatian Television that a lower VAT rate on gas supply would definitely have a significant effect.

"As you know, in addition to the current standard rate of 25% on the supply of gas, there are two lower rates, of 13 and 5 percentage points, and (lowering the VAT rate) would definitely help make the gas price increase as of 1 April lower," he said.

The minister said that he believed one should maximally try to influence the price through VAT and possibly treat electricity and gas supply as the supply of basic foodstuffs.

Ćorić noted that the current VAT rate on basic foodstuffs - meat, fish, eggs, bread and a number of other products - was 5%, which he said was an appropriate rate and should not be lowered.

Asked about an increase in fuel prices announced for Tuesday, Ćorić said that he believed prices of oil products would stabilise at a lower level in the months to come.

Increase in prices not related to euro changeover

The minister said that the increase in prices of energy products on world markets was spilling over to the production process and consequently causing the current increase in prices in Croatia and that the price hikes were not related to the euro changeover.

Asked if prices were being raised under the guise of inflation ahead of the euro changeover, he said that Croatia was expected to enter the euro area in a year's time, and that the current price increases were due to the fact that energy prices had increased significantly on world markets in recent months, which was spilling over to the production process and consequently having an impact on prices.