VAT plan freezes construction sector

The government's announcement in late July for the suspension of value-added tax on new buildings with the exception of primary residences has led to a freeze on housing construction.

Property market professionals point out that, after considering the possible complications from the way the measure will apply, and the likelihood of all existing buildings being exempted from the VAT suspension, there has been a general "blackout" in the sector, as no construction business wants to take the risk of having a permit issued with a 24 percent VAT that may not apply a few months later.

Construction sector sources say the government must immediately clarify what it intends to do, as for now the sector has come to a standstill instead of receiving a boost. If the government does proceed - as is the most likely scenario - to the suspension of VAT only for licenses issued after...