Abolishment of VAT Reduction on Local Produce in Latvia Expected Next Year

• The reduced VAT rate of 5% for fruits and vegetables produced in Latvia is likely to be abolished next year.
• The reduced VAT rate was introduced as a pilot project in 2018 and was planned to last for three years.
• The Ministry of Agriculture concluded that the criteria for maintaining the reduced VAT rate had been met.
• The Finance Ministry disagreed and believed the pilot project was not successful.
• The government agreed to maintain the reduced VAT rate until autumn 2023.
• Fruit and vegetable prices did not decrease due to the reduced VAT rate, but it helped local producers and fought against the shadow economy.
• The previous government did not extend the application of the reduced VAT rate, and a full 21% rate is planned for next year’s budget.
• An additional EUR 3 million will be allocated to help fruit and vegetable producers with investments to increase competitiveness and export capacity.

Source: eng.lsm.lv

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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