BackOn July 24, 2023, it has been made public in the Official Gazette of Navarra the enactment of the Foral Legislative Decree 4/2023, dated July 5, regarding tax harmonization. This decree establishes the extension of the reduction of the value added tax (VAT) rates applied to certain foodstuffs in the region.
This measure was included in the legal system of Navarre, based on the extension of the reduction of VAT tax rates on certain foodstuffs in the common territory by means of Royal Decree-Law 5/2023, dated June 28. Royal Decree-Law 5/2023 adopted and extended various measures to address the economic and social consequences of the conflict in Ukraine, in addition to providing support for the reconstruction of the island of La Palma and for situations of vulnerability. It also incorporated the transposition of European Union directives concerning structural modifications of mercantile companies and the reconciliation of family and professional life of parents and caregivers, as well as the execution and compliance with European Union Law.
By means of this new foral decree, the application of the reduced VAT tax rates is extended during the second half of 2023. Thus, the 0% tax rate on basic food products will be maintained, seeking to contribute to the reduction of the final price of these foods and to promote a more affordable access to basic food for the population. Likewise, the 5% tax rate applied to olive and seed oils, as well as pasta, will be maintained. This tax reduction is also intended to benefit consumers and mitigate the effects of price increases on essential products.
It should be noted that the application of the aforementioned tax rates is subject to the evolution of the year-on-year rate of underlying inflation, which will allow adapting the measures according to the economic conditions and maintaining a fiscal and financial balance in the region.
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