Foodstuff, Latvia, Legislation, Markets and Companies, Taxation
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Thursday, 28.03.2024, 18:05
Latvian government not to consider proposal for lower VAT on fruit, vegetables
Speaking to the press after the meeting of the ruling coalition parties on
August 22nd, Prime Minister Maris
Kucinskis (Greens/Farmers) said that the budget drafting had just begun
therefore any such issues had been removed from the government's agenda but the
Cabinet of Ministers might return to the subject once it had a more accurate
estimate of the fiscal space and it was clear how much money could be allocated
to the new initiatives.
As reported, today the Latvian government was expected to discuss the
Agriculture Ministry's proposal to lower the VAT rate on fruit, berries and
vegetables common in Latvia from the standard VAT rate of 21% to 5%. The
Agriculture Ministry insists that it is the best way to fight the shadow
economy in the sector and to improve competitiveness of legal vegetable
vendors.
But the Finance Ministry and the Economics Ministry recently produced
reports in which they disapproved of the Agriculture Ministry's proposal,
saying that lowering VAT on food was not the most effective way to address the
problems of social inequality, to fight the shadow economy and to increase the
competitiveness of legal businesses. In addition, the move would create a
negative fiscal effect on the Latvian budget, the two ministries said.