Friday, May 29, 2009

Estonian VAT up to 20% soon?

The Government is currently discussing, as a part of the huge saving plan, the possibility to increase the VAT rate from 18% to 20%.

If this move is decided, it would take effect from the 1st of July and could bring an additional EEK 800 million to the State budget.

However, analysts warn the State against the potential risks. Indeed, increasing the rate by 2 points is likely to increase the inflation rate during 2 years by 1.6%. It could also lead to less consumption after prices raise.

It is probably something Estonia does not need right now but euro is often more important to the State...

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