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Latvian parliament views initiative for changing VAT rate for food product

On Thursday, 14 December, Latvia’s Saeima made its decision on the collective application that proposes reducing VAT on everyday healthy food products and increasing VAT on unhealthy products.

It is mentioned in the parliament’s decision that in addition to the amendments approved in November for Value Added Tax, a reduced VAT rate of 5% will be introduced in Latvia next year. This tax rate will be applied to fresh fruits, berries and vegetables typical for Latvia.

The Saeima also declined the proposal detailed in the collective initiative regarding the increase of VAT for unhealthy products.

Saeima’s press-service reports that the parliament made this decision, considering European Union directive that does not provide for the application one standard VAT rate and two reduced VAT rates. Another important factor to consider is the government’s supported state tax policy’s guidelines for 2018-2020, which does not provide for increased tax rates.

VAT base rate is currently 21%. Reduced VAT rate of 12% is applied to special food products intended for newborns, medicine, medical equipment, domestic passenger transport services, educational literature, periodical expenses, accommodation services in tourism, wood fuel and heating services for households.

This initiative was submitted to the Saeima in August. It was signed by 10,015 Latvian citizens. Authors of the initiative invite a reduction of VAT to 5% for fresh meat and fish, honey, eggs, whole wheat products, specific fruits, berries and vegetables, milk and its products.

Authors also propose increasing VAT to 31% on sweet drinks and confectionery products that contain trans-fats, as well as products whose salt content exceed 1.25 g per 100 g.


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