Anti-inflationary shield 2.0. The Sejm passed an act reducing VAT on food, fuel and energy

On Thursday, the Sejm passed an amendment to the VAT act, which provides for a temporary reduction to zero of the rates of this tax on food, fertilizers and gas, down to 5 percent. hot and up to 8 percent. on fuel. The Act is an element of the so-called anti-inflationary shield 2.0 and is to enter into force on February 1 this year.

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438 deputies voted in favor of the bill, no one was againsttwo Members abstained. Now the bill will be discussed by the Senate.

Earlier, the deputies, as recommended Public Finance Committee, rejected all nine amendments to the bill at second reading.

The act provides that the reduced rates of tax on goods and services are to apply from February 1 to July 31, 2022

VAT reduction. What goods will it cover?

Accordance with the law VAT on food and drinks currently covered by the 5% rate is to drop to zero. With 23 percent up to 8 percent the rate of this tax is to drop for engine fuels: diesel oil, biocomponents constituting self-contained fuels, gasoline, LPG gas. For fertilizers, plant protection products, garden soil and other means supporting agricultural production, VAT is to drop from 8%. to zero. VAT on gas is expected to drop with 8 percent to zero, for thermal energy with 8 percent to 5%, and in the case of electricity, the reduced tax rate of 5% will be maintained.

The reduction of the VAT rate to zero is intended to cover such food products – taxed at a rate of 5 percent – such as meat and fish and their products, dairy products, vegetables and fruit and their products, grains, milling industry products, cereal preparations and bakery products, some drinks, e.g. containing at least 20% fruit or vegetable juice, milk drinks and the so-called plant milks.

In the case of means used for agricultural production, VAT reduction from 8%. to zero, it will cover fertilizers, plant protection products, horticultural soil, products supporting agricultural production such as: agents improving soil properties, growth stimulants and growing media.

The total decline in state budget revenues was estimated at approx. PLN 11.6 billion, of which the reduction of VAT on food and beverages is to translate into a decrease by approx. PLN 2.92 billion, in the case of fuels it is to amount to approx. PLN 3.11 billion, a decrease in VAT on fertilizers has a negative effect on the budget at the level of PLN 0.52 billion, on gas – approx. PLN 2.09 billion, on electricity it is approx. 2, PLN 30 billion, and for thermal energy – approx. PLN 0.67 billion.

The act is to enter into force February 1, 2022


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