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Latvian Agriculture Ministry sets up task force to analyze opportunities for reducing VAT on food

BC, Riga, 16.02.2017.Print version
The Agriculture Ministry has set up a task force headed by the ministry's parliamentary secretary Ringolds Arnitis, which will analyze options for applying reduced value added tax to food products or several specific food product groups, reports LETA.

The task force includes representatives of the Agriculture Ministry, Finance Ministry, Health Ministry, Economics Ministry, State Revenue Service, Latvia University of Agriculture, Latvian Federation of Food Companies, Agricultural Organizations' Cooperation Council, Latvian Gardeners' Association, association Latvijas Darznieks, Farmers' Saeima, Association of Agricultural Cooperative Societies, Latvian Chamber of Commerce and Industry, and Latvian Food Retailers' Association.

The task force will look into other countries' experience of applying differentiated VAT rates to food products, and the effect that reduced VAT could have on producers' competitiveness and shadow economy. The experts will also analyze the effect of reduced VAT rates on needy residents, whether reducing VAT on food will increase consumption of Latvia-made food, and the possible effect of reduced VAT rates on the national budget.

The task force will then prepare its proposals concerning opportunities for reducing VAT on food or individual food product groups, and submit it to Agriculture Minister Janis Duklavs.

As reported, agricultural organizations have on several occasions called for reducing the VAT rate on food from 21% to 12%. The Finance Ministry has been wary about the initiative, pointing out that, for instance, in 2015 this would have cut budget revenue by EUR 194.8 mln. Farmers' latest proposal stipulates initial reduction in VAT rate to 12% only for fruit and vegetables.

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