The Government has reached a decision on reducing the Value Added Tax (VAT) rate for baby products, school supplies and fodder and additives for use in animal feed and live stock.

Speaking at Wednesday's news conference, Prime Minister Nikola Gruevski said the Government had approved a bill amending the Law on VAT envisaging reduction in the rate of these products from 18% to 5%.

"The new law is expected to enter into force after the establishment of a new parliamentary structure and following its adoption in Parliament, which is set to take place in late May or early June. Fiscal implications caused by the act will be in amount of 380 million denars annually i.e. a half of it for 2014 because six months are left in the year," Gruevski said.

The VAT reduction  for these products, he added, is going to contribute to lowering the tax paid by retailers, thus enabling prices to drop.

"The measure is aimed at helping the parents by cutting down their costs for the children as well as the producers of animal feed and those of meat and dairy products and indirectly is aimed at the Macedonian economy in a bid to improve competitiveness and allowing some Macedonian dairy and meat products to be sold on foreign markets as well as a result of their more competitive price," noted Gruevski.