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Hungary Lowering VAT On Food

Tuesday, February 13, 2018

The Hungarian Government has said that it will continue its policy of reducing rates of value-added tax on various foodstuffs in 2018 to boost domestic agriculture and reduce food prices.

The Ministry of Agriculture said in a recently published statement that additional VAT cuts on food will follow up those introduced on January 1 this year, when VAT on pork offal and by-products and fish was reduced from the standard rate of 27 percent to five percent.

"The Government's goal is to tax the most important foodstuffs with the lowest possible levels of VAT, and accordingly [it] will continue to reduce the VAT on key foods in 2018," the Ministry said.

Hungary has reduced VAT on a number of other food products in recent years. In the Government's 2017 Budget, announced in 2016, milk, eggs, and poultry were added to the list of products eligible for Hungary's five percent reduced rate of VAT.

In addition, VAT on restaurant services was reduced from 27 percent to 18 percent on January 1, 2017, and to five percent on January 1, 2018.

The agriculture ministry said that latest round of VAT cuts will save the average family around HUF35,000 to HUF40,000 (USD157) per year.

"The other big winner of the tax cuts is agriculture, because both the food economy and agriculture are enjoying more opportunities as a result of the tax cuts and the black economy is shrinking, while people can buy more and increase their consumption," the Ministry concluded.