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Spain Will Reduce VAT On Face Masks Amid Pandemic

By Matt Thompson · November 13, 2020, 4:12 PM EST

The Spanish government will reduce value-added tax on surgical face masks, which are currently mandatory in all public spaces, from 21% to 4% starting next week, the country's finance minister told Parliament.

Speaking in the Spanish Senate, María Jesús Montero told parliamentarians Wednesday that the government will approve a decree next week to further bring down the price of surgical face masks, which are currently capped at €0.96 ($1.14) per unit.

The measure must translate into lower costs for consumers and not higher profits for businesses, Montero said, and the government will be "alert" to ensuring that this is the case.

The European Union granted approval for Spain to put the VAT reduction in place after repeated requests from the Spanish finance minister to the European Commission, the arbiter of the EU's tax rules. Permission was received Tuesday, according to Montero.

EU countries can charge a zero or reduced VAT rate on face masks and other personal protective equipment, as well as coronavirus vaccines, under pandemic relief measures adopted in late October.

Spain is one of several European countries that have either reduced or temporarily scrapped VAT on masks. Face masks are taxed at 6% in Portugal, 5.5% in France and 5% in Germany. Italy, Belgium and the Netherlands have no VAT on the items.

The EU had suspended the collection of import VAT on items such as personal protective equipment, testing kits, ventilators and key medicines beginning in May. The exemption was set to expire Nov. 1, but will now run until April.

"There is also room to further adapt the VAT framework to ensure that COVID-19 vaccines and tests become more affordable for health services and citizens," the commission said in extending the exemption in October.

The commission will also temporarily adapt the rules to apply a reduced rate or exemptions of VAT for COVID-19 testing kits and allow member countries to grant a zero rate for COVID-19 vaccines.

Under EU VAT rules, a country isn't generally allowed to reduce the rate to zero for an item that has previously been subject to the tax.

However, as a disaster relief measure, an exemption was made for the bloc's 27 member countries and the U.K. to ensure that medical equipment and protective gear could easily get to where it was needed.

The Spanish Finance Ministry could not be reached for comment.

--Editing by Joyce Laskowski. 

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