Germany approves VAT cut to counter COVID-19 impacts

The German government approved a cut in value-added tax from 19 to 16 percent for six months starting in July to counter the economic effects of the COVID-19 pandemic, the Ministry of Finance announced.

A lower value-added tax that applies to most food products and everyday consumer goods would be reduced from 7 to 5 per cent. The ministry stressed that in general, the application of the new rules would be made "as flexible and practical as possible" for companies, Xinhua news agency reported on Friday.

Furthermore, families would receive a one-off bonus of 300 euros (US $340) per child paid in two installments in September and October. Families with children and single parents were particularly burdened by the restrictions during the COVID-19 pandemic, according to the ministry.

"With the economic stimulus package, we are providing strong impetus to lead our country out of the crisis and we are creating the confidence we need now," said Finance Minister Olaf Scholz.

All measures of the government stimulus packages still require formal approval by parliament before coming into force. In order to implement the measures in time, special parliament sessions are scheduled for June 29.

( With inputs from IANS )