Inspired by Scotland, Czech gov’t aims to cut VAT on period products
Minister of Finance Alena Schillerová plans to propose a reduction in value added tax (VAT) on period products, such as tampons and sanitary pads, to 10 percent from the current 21 percent. The news comes a week after Scotland became the first country in the world to make such products free and readily available for all.
Minister of Finance Alena Schillerová plans to propose a reduction in value added tax (VAT) on period products, such as tampons and sanitary pads, to 10 percent from the current 21 percent. The news comes a week after Scotland became the first country in the world to make such products free and readily available for all.
Prime Minister Andrej Babiš, reacting to Scotland’s decision, said via Twitter last week that the Czech Republic could take similar steps for girls and women from low-income families without providing specifics and asked Schillerová to look into it.
The Ministry of Finance estimates that reducing the VAT rate would reduce revenue by some 300 million crowns annually. Scotland, which has a population half the size of the Czech Republic, has estimated that providing period products free of charge to all would could 9.7 million pounds annually, or roughly 285 million crowns.
In the Czech Republic, VAT is generally 21 percent on supplies of goods and services within the country. Certain supplies (e.g. groceries, construction works related to social housing) are taxed at a rate of 15 percent, and a second reduced rate of 10 percent is applicable for specified categories of goods (some medicaments, books, newspapers, and also heating).
The second reduced VAT rate of 10 percent now applies, for example, to medicines and baby food under the VAT Act, which also set conditions for the import of goods from abroad. The lower house of Parliament has begun discussing Schillerová’s draft amendment period products. If passed, it could go into effect already in spring 2021.
“Due to the fact that there is a lot of competition in the market of feminine hygiene products, I expect that the customer will really feel the reduction in VAT in their purses,” Schillerová told the new server Blesk.cz. “Especially for lower-income households, this reduction could significantly help in the current economic situation.”
Last year, according to Blesk, the Ministry came out against such a reduction, arguing that exceptions to VAT rates should be implemented as little as possible “and only in justified cases so that the entire VAT system is as transparent and as uncomplicated as possible.”
To date, the VAT rate for period products has been governed by a European Commission the opinion on the appropriate level for diapers, which, up until 2013, were at a reduced rate in the Czech Republic but later moved to the basic rate to comply with EU rules.
“According to the European Commission, diapers are not a product serving hygienic protection. In terms of the legal interpretation of the Czech version of the VAT Directive, the situation is similar for sanitary napkins,” the Ministry said earlier.
