In response to the Russian embargo on most food products imported from the European Union, Latvia rejects call for VAT cut for food.
The Farmers’ Organizations Cooperation Council in Latvia had said that a VAT reduction would boost the economy, reduce non-compliance rates, and encourage the domestic consumption of food products that would have otherwise been exported to Russia. It pointed out that most EU states already have reduced VAT rates in place on food.
Latvian Government has instead recently proposed a twelve month tax break for businesses impacted by Russian sanctions. The tax breaks could be applied most easily to corporation tax and to employers’ labor tax payments, and that they could be made conditional on employers not laying off staff. The situation has become rather complicated; nevertheless, we cannot solve this problem at the expense of other industries. What will happen if medical products are added to the list of products banned by Russia? Should we then reduce VAT on medications as well?” Economy Minister Vjaceslavs Dombrovskis (Unity) said.
