Czech Government Introduces Higher Tax on Soft Drinks

Mineral water, cola, juices and energy drinks. The tax surprise caught beverage producers by surprise.

One significant ambiguity has loomed since the remarkable unveiling of the consolidation package yesterday (May 11).

Based on the government’s report and Finance Minister Zbyněk Stanjura’s (ODS) statement, looks like that beverages would be subject to the higher VAT rate.

Regarding VAT rates, there will be a separation between food and soft drinks. With the exception of tap water (which falls under the 12 percent rate due to water and sewerage charges), soft drinks’ prices will increase by up to seven percentage points.

Štefan Fous from the Ministry of Finance confirmed that the reasons for this adjustment include the growing consumption of energy and sweetened beverages, as well as the frequent sale and distribution of such products in disposable packaging, often made of plastic.

Veronika Jakubcová, executive director of the Association of Soft Drink Producers, expressed her dismay, stating, “The beverage industry views this development very unfavorably. It is a significant disappointment for us, as it will inevitably lead to higher prices for the end consumer.”

Jakubcová believes that the higher tax should also be applied to coffee. Conversely, milk and dairy products such as Actimel and kefir are classified as food items and will therefore remain subject to the lower tax rate.

“We strongly disagree with this decision. Natural mineral waters should remain affordable and accessible to the general public due to their health benefits; they should not be transformed into luxury goods,” said Lutfia Volfová, spokesperson for Mattoni 1873, the beverage group responsible for bottling renowned brands such as Mattoni, Aquila, Magnesia, Poděbradka, Dobrá voda, and Hanácká kyselka.