The latest addition to the list of preferential VAT goods
and services that benefit from a 5% VAT rate was introduced on
October 14 2016, and is effective from the same date. It
prescribes the application of the reduced VAT rate to the
supply of pellet fuel, pellet boilers and pellet stoves.
The preferential VAT rate is commonly applied to human food
products, medicines and medical equipment, publications, seeds
and planting material used in agriculture, other agricultural
products such as fertilisers, foils and machinery, and software
and hardware products, among others.
The decision to add pellet products to the list of
preferential VAT goods was first announced in May 2016, along
with the announced subsidisation of pellet stove purchases. The
aim of both measures is to curb the still-common wood heating
in the country. Depending on the methodology, it is estimated
that anywhere between 35% and 80% of households in the country
are still using wood as the primary heating element.
One obstacle that still needs to be removed is the delayed
implementation of the application of the new VAT rate to
imports of pellet products. As the customs authorities are
still expecting the Ministry of Finance to issue the rulebook
in regards to the amendment in order for them to apply the new
rate, the previously valid standard rate of 18% continues to
apply to the import of such products while their domestic
resale must be done with the rate of 5%, thus creating a
financially disadvantageous position for traders.
Elena Kostovska (email@example.com)
Eurofast Global, Skopje Office
Tel: +389 2 2400225