The amendment to Schedule 1 of the Value Added Tax Act was passed in the Lower House on July 3rd and will be debated by the Upper House in the coming days. The zero-rating of food items will take effect on August 1st 2025 and will run until May 31st, 2025.
The VAT removal is part of the government’s wider cost-of-living strategy and is projected to reduce prices on these items by 12.5 per cent, the current VAT rate.
“We expect a reduction in the cost of at least 70 items, a reduction of 12.5 per cent, which would have a meaningful impact on the cost of living and the ability of households to feed themselves,” Prime Minister Pierre to the press on the sidelines of Parliament.
He expressed gratitude to the Chamber of Commerce and the broader private sector for their support, noting that government and business collaboration was key to ensuring consumers see the full benefits of the tax relief.
“I want to thank the Chamber of Commerce for working with us. Since we’ve had the full cooperation of the Chamber and the business sector generally, the consumer will benefit. The price reduction or the removal of VAT will serve to benefit the consumer in that the cost of these products will be reduced,” he added.
Deputy Prime Minister Dr. Ernest Hilaire echoed the Prime Minister’s sentiments, praising the administration’s ongoing efforts to make essential goods more affordable. He also emphasised the importance of enforcement, warning that the success of the measure depends on retailers adjusting their prices to reflect the VAT exemption.
“At the end of the day, we still have to make sure that the retailers actually remove the 12.5 per cent. If the government removes the requirement to pay VAT on it, and they still do not reduce the price, then it defeats the point. We are going to put measures and mechanisms in place to monitor and make sure that is done.”
The government has stated that the delayed implementation date of August 1st will allow the private sector adequate time to make necessary pricing adjustments and update their systems accordingly.
Zero-rated items include: onions, garlic, beans and peas, fruits and vegetables, poultry, among other food items. The full list of exempted items will be gazetted once the amendment passes in the Upper House.