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Cyprus Internet Directory [ Supermarkets to absorb VAT rise ]

Supermarkets to absorb VAT rise

Natalie Lambrou and Poly Pantelides

MAJOR supermarket chains in Cyprus have announced they will not be raising VAT from 15 to 17 per cent tomorrow, out of “respect” for the Cypriot consumer.

Value Added Tax (VAT) is set to go up tomorrow from 15 per cent to 17 per cent.

But the larger supermarket chains have said people have enough to pay for already.

“We respect our customers and the difficulties they are facing because of the economic crisis. We will not raise our prices despite the VAT change,” said executive head of Orphanides supermarkets, Christos Orphanides.

Marketing manager for Alphamega Hypermarkets, George Theodotou also said out of “respect” for the consumer, they did not wish to “overburden them with an extra 2.0 per cent” at a time of financial crisis. 

LIDL supermarket also announced that it would not be raising VAT and it is understood that Carrefour will also keep VAT prices as is.

The VAT includes most consumer goods.

For example, the VAT on cigarettes, clothes and shoes, diapers, alcoholic beverages and cleaning materials will go up by two percentage points.

A packet of 20 cigarettes now costing €4.40 should cost €4.48 tomorrow and an item costing €100 should cost €102.

Supermarkets will still need to pay the state the extra two percentage points but will absorb the expense themselves.

“It’s a significant cost,” Theodotou said when asked how much this would entail financially.

No supermarket wanted to say how much money the VAT increase would cost them.

But smaller shops do not seem to be able to follow in kind with kiosk owners telling the Cyprus Mail their prices would go up.

Parliament approved the VAT rise as part of the 2012 budget with the government wanting to earn some €140 million from the move.

However, the economy has stopped growing and a recent poll showed more than 80 per cent of those asked said they were cutting back on expenses, including clothes and shoes that are just about to get pricier.

The state is expecting however to get around €60 million from electricity bills, also subject to the VAT mark-up.

A demo is planned for today, from 12:30pm and 3:30pm outside offices of the Electricity Authority of Cyprus.

Food items will not get higher VAT as they are part of the five per cent VAT category which will be unchanged.

Also exempted from the VAT are medicines, medical equipment, books, water and juice, and most services including restaurants and hotels, health and education.


(Source: Cyprus Mail)
Copyright © Cyprus Mail 2008 Please contact Cyprus Mail for the copyright terms of this article.

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