The imposition of a five per cent value added tax on January 1 will most probably lead to an increase in the prices of bread and the basic pastries by that amount, adjustments will likely be made to milk prices as well, but the decision is up to each bakery and dairy company, the Zitozajednica and Croatiastocar farming associations have recently said, while retail chains say are still talking with suppliers and hope the prices of the most important products will not go up for now.
Zitozajednica says the increase in the prices of bread and the basic pastries will not deal a drastic blow to consumers, as it will be marginal.
Croatiastocar says the five per cent VAT is an additional cost for the dairy industry which will cause an additional liquidity problem.
As of January 1, bread, milk, books and scientific journals, medicines, orthopaedic aids and cinema tickets will no longer be exempt from VAT but subject to a five per cent rate.
This means that the prices of pastries and bread, which range between two and 13 kuna, will go up by HRK 0.10-0.65.
The Mercator retail chain says the prices for Mercator and Getro customers will not go up until further notice.
The Konzum chain says it is still talking with suppliers but that the prices of the most important goods will probably not go up.
On January 1, the zero VAT rate on bread, milk, books, scientific publications, medicines, orthopaedic aids and cinema tickets were be replaced with a rate of five per cent in Croatia which recently amended the Value Added Tax Act by majority vote in parliament. The law was amended to align it with European Union directives which do not allow a VAT rate below five per cent.
