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The Members of the National Council of the SR have approved decreasing the value added tax (VAT) rate on medicaments. According to the approved amendment to the VAT Act, with effect from next year, medicaments and selected healthcare goods will carry a decreased tax rate of 10%. Other goods will remain under the basic VAT rate of 19%.
According to the government amendment, the decrease in the VAT rate for medicaments will result in a budgetary loss of SKK 2.8 bn. next year, almost SKK 3 billion in the subsequent year and in 2009 budgetary income should decrease by SKK 3.2 bn. According to the Finance Minister, Ján Počiatek, the finance department has reflected this in the budget.
The negative impact on public finance can be relatively small because health insurance companies belong to the public administration sector, and lower tax incomes will be compensated by savings on the part of insurance companies, which fully or partially cover medicaments.
Since the prices of medicaments are state-regulated, the decrease in the VAT rate will, according to the expectations of the finance department, be reflected in consumer prices. Consumption should not change significantly, since in this type of goods final consumption does not depend directly on prices but rather on actual needs.
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