Energy, Financial Services, Legislation, Lithuania, Taxation

"My position remains unchanged – the tariff could be at 9% from the fall until the end of 2017. When it comes to requirements of the European Union (EU), as we can only have two discount tariffs. We have reviewed and decided to apply a lower tariff on some goods and services, i.e., 5% instead of 9%," Sapoka told journalists after discussing tax reforms with the prime minister on Tuesday.

The finance minister did not specify the government's final proposals on the VAT discount for hotels, however, Economy Minister Mindaugas Sinkevicius said that a compromise version had been offered.

"Things will not be the way they used to be, however, this does not mean that there will be no discount. We will have a compromise version. However, the parliament will also be involved in the process, therefore, the changes can still be revised," Sinkevicius told the news conference.

According to information available to BNS, the Finance Ministry suggests leaving 5% and 15% VAT tariffs for 2018, with the 15-percent tariff applied to heating and hotels. Before June, the VAT on heating was 9% and is now 21%, while hotels pay a 9% VAT tax.

Furthermore, there is a proposal to lower the existing 9% tariff on books and passenger transport to 5%.

At the beginning of July, the ruling Lithuanian Farmers and Greens Union agreed with the proposal made by the opposition conservatives to reintroduce a lower VAT tariff on heating in exchange for their support to the reform of the forestry sector. The deal did not specify the VAT tariff, however, the conservatives' leader Gabrielius Landsbergis stated it should be at 9%.

In Sapoka's words, the Cabinet's final proposals on tax changes will be presented next week after discussions with the society.

The tax reform will have to be finalized by the parliament.