Will the 5% VAT rate be maintained for vegetables, fruits and berries characteristic of Latvia?

The representative of the initiative, Emīls Azanda, calls for maintaining the current VAT rate of 5% for vegetables, fruits and berries characteristic of Latvia in 2024 and in the following years, “in order not to further aggravate the burden of the cost of living for the vulnerable part of society, not to promote the spread of the shadow economy in agriculture, as well as to promote a healthy lifestyle in Latvian society”.

In Azanda’s view, in this way the state will practically support those people who consciously take care of their health. It will also reduce the expected burden on health care in the future.

“State authorities, such as the State Revenue Service, should not have to fight with the possible transition of agricultural companies to the shadow economy in order to avoid the application of the full 21% VAT rate from January 1, 2024,” says the author of the initiative.

It has already been reported that the coalition has agreed to apply the reduced rate of 12% VAT to fresh fruits and vegetables. To do this, an additional 16 million euros must be found in the budget.

At the same time, Prime Minister Evika Siliņa (JV) previously stated that the coalition has agreed to support only local fruit and vegetable producers, not the entire range of producers, allocating three million euros to the industry in the next year’s budget.

The Ministry of Agriculture (MoA) previously stated in the informative report that the fruit and vegetable industry in Latvia has developed significantly in the period from 2017 to 2022. The areas of fruit growing and vegetable growing increased by 5%, the value of the produced products increased by 46%, and the export value – by 77%.

ZM also noted that the fruit growing and vegetable growing sector in Latvia is developing faster than the average in the European Union (EU). The output value of fruits and berries in Latvia has doubled, ranking Latvia in third place in the EU after Luxembourg and Slovenia, the output value of vegetables in Latvia has increased by 25% and is above the EU average, while the output value of potatoes in Latvia has increased by 57%, ranking Latvia in sixth place .

The reduced VAT rate of 5% for fruits and vegetables is valid from January 1, 2018 to December 31 of this year.