Latvia, Legislation, Markets and Companies, Retail, Taxation

The State Revenue Service had timely announced that retailers would have to re-program their cash registers, which all the retailers have managed to do on time, said Danusevics.

Rimi Latvija chain stores' marketing and public relations manager Zane Enina told LETA yesterday that price tags were being replaced at Rimi stores on Saturday and Sunday.

Enina also said that most customers were pleased at the reduced prices.

Maxima Latvija press secretary Ivars Andins told LETA that the changing of price tags at Maxima stores might take a few days, as price tags for about 25,000 various goods would have to be changed. So far, however, no problems have been reported from Maxima stores regarding the reduction in the VAT rate, said Andins, adding that a majority of residents was aware of the changes.

As reported, the VAT rate was reduced from 22% to 21% as of July 1, according to amendments on the Law on VAT passed in the final reading by Saeima this past May.

The reduction of the VAT rate from 22 to 21% this year will leave the budget with LVL 16.5 million less in revenue this year, and LVL 40.5 million less in revenue in 2013.

The Finance Ministry explains that reducing the VAT rate will improve Latvia's competitiveness in the region and reduce the pressure of inflation on Latvia's residents.

The lower VAT rate will also be closer to Lithuanian and Estonian VAT rates – 21% and 20% respectively.