12.22.22

Anti-inflation tax measures

Tungsten has followed the anti-inflation measures deployed by the Polish government, which, as the name suggests, are a set of fiscal measures which serve as a direct response to rising inflation in Poland.  

However, the proposed measures do underline the limitations of Member States in respect of some of the fiscal measures they can implement. The European Commission, for example, while agreeing to the zero-rating of basic foods as part of the package, has blocked the zero-rating of natural gas, fuels and fertilisers. This is owing to EU Directive rules, which cite that energy must be taxed to at least 5%. 

While the basic foods rate was reduced to zero VAT early in 2022, it was initially envisaged that Poland would remove the zero VAT rate in January 2023. However, the Chancellery of the Prime Minister has confirmed on the Polish government website that the zero VAT rate on food products will continue until the middle of 2023.  

With inflation still a primary concern for many European countries, we can expect to see multiple countries initiate similar measures over the coming months.