Reduced VAT applied to basic food groups in Latvia as of July 1

A 12% VAT rate is already applied in Latvia to several food product groups, including specialised infant formula, fresh fruits, berries, and vegetables. Starting July 1, the reduced VAT rate will also apply to all types of bread, including pasteurised or frozen bread, as well as bread containing permitted additives such as seeds, nuts, grains, etc.; cow’s, goat’s, or sheep’s milk, including lactose-free milk, regardless of fat content; poultry meat – chicken, turkey, duck, and goose meat, as well as poultry by-products, including cut, boned, sliced, and ground meat; unprocessed poultry eggs. The Consumer Rights Protection Center (PTAC) noted that the reduced VAT rate does not apply to frozen meat, sausages, dried meats, pastries, cakes, pies, crackers, toast, breadcrumbs, ultra-high-temperature (UHT) milk, condensed milk, milk with additives (e.g., chocolate or strawberry flavor), and plant-based alternatives (oat and almond beverages), as well as ground meat, if the added salt content exceeds 1%. To help shoppers better understand how the VAT rate reduction should be reflected in the price, the PTAC has developed a price comparison calculator. Users can select a product and enter its current price at the 21% VAT rate, and the calculator will determine how the price would change at a 12% VAT rate if the full reduction were reflected in the final price. Shoppers are encouraged to pay attention to price tags and receipts while shopping. When shopping, make sure that the receipt indicates the reduced tax rate (12% or the VAT B/C rate, depending on the store’s system) for the relevant food products. The reduced VAT rate will also apply to sale items if they fall within the specified product groups. To make all this information available to the public in one place, the PTAC has created a special section on its website titled Reduced 12 % VAT Rate for Basic Food Products. It explains which product groups are subject to the reduced VAT rate, what the exceptions are, how the VAT reduction may affect the final price, what shoppers should look out for in stores, and where to turn with questions or complaints. Jānis Dubults, Executive Director of the Latvian Food Retailers Association, stated on the Latvian Television program “Morning Panorama” that retailers are committed to honestly and conscientiously implementing the reduced tax rate by passing it on to shoppers. "It is also unequivocally important that suppliers and manufacturers act responsibly so that the price reduction is passed along throughout the entire supply chain and can be successfully passed on to consumers," Dubults noted. Retailers are also calling for an expansion of the range of products eligible for the lower VAT rate.