Fuel retailers in Latvia may be subject to a solidarity levy if their actual retail prices exceed an objectively calculated benchmark price by more than 3%, according to a draft law submitted by the Ministry of Economics (EM).
Under the proposed legislation, if a retailer’s fuel price exceeds the benchmark retail price by more than 3%, the revenue above this threshold would be included in the base for the solidarity payment and taxed at a 100% rate.
At the same time, the levy would not apply if the retailer can provide documentary evidence that its actual fuel procurement costs during the relevant period exceeded the benchmark price calculation by more than 3%. In such cases, the taxable base would be reduced proportionally to the documented excess in procurement costs.
The ministry notes that the draft law, titled “Law on the Solidarity Payment for Fuel Traders,” has been developed to mitigate the negative socio-economic impact caused by sharp increases in fuel retail prices, as well as to generate additional budget revenues to strengthen national supply security and cover related fiscal needs.
The solidarity payment is intended as a temporary mechanism,
to be applied only when fuel retail prices significantly exceed changes in global oil product prices. It is designed to both generate additional fiscal resources and reduce the impact of rising fuel costs.
According to the ministry, the measure aims to ensure that tax changes are properly and promptly reflected in retail fuel prices, and to address situations where price increases at the retail level significantly exceed global market trends or do not correspond to tax adjustments.
A government-designated institution would calculate and publish a benchmark retail price for diesel and petrol on a weekly basis. This benchmark would include key price components such as fuel acquisition costs, delivery, storage, logistics, and other relevant parameters.
The EM emphasises that
the benchmark price would still allow retailers to make a profit, as the solidarity levy would target only excessive mark-ups.
If the 3% tolerance threshold is exceeded, all revenue above that level would be subject to the 100% levy. Retailers would then be required to submit a solidarity payment declaration and transfer the calculated amount to the state budget by the 23rd day of the following month.
Retailers would also be required to submit supporting documents—such as fuel purchase invoices, customs declarations, and payment declarations—to Possessor (SIA “Publisko aktīvu pārvaldītājs Possessor”), which would administer the system.
“Possessor” would oversee the calculation and payment of the levy and compare declared retail prices with the published benchmark. To ensure compliance, it would cooperate with the Consumer Rights Protection Centre (PTAC), which has the authority to request information, conduct inspections, and handle consumer complaints.
If discrepancies are identified, “Possessor” would issue a payment notice.
Late payments would incur a penalty of 0.05% per day, with payment required within ten days of notification. Retailers providing false information or failing to comply could face administrative penalties imposed by PTAC.
The law is expected to enter into force the day after its promulgation.
As reported by LETA, following a government meeting on the 17th of March, Minister of Economics Viktors Valainis (Union of Greens and Farmers) stated that the government is considering introducing a windfall tax on fuel retailers to monitor and limit mark-ups, ensuring that price decreases in global markets are reflected domestically.
The minister acknowledged that such a mechanism would constitute market intervention, which is generally not considered economically desirable, but argued that it is necessary under current conditions.
Consultations with industry representatives are planned to mitigate potential risks of challenges
before the Constitutional Court.
It has also been announced that from the 1st of April to the 30th of June 2026, Latvia will apply a temporary reduction in excise duty on diesel fuel by approximately 15%—from 467 euros to 396 euros per 1,000 litres. For marked diesel used in agriculture, the excise rate will be set at 21 euros per 1,000 litres.
According to estimates by the Ministry of Finance, these changes could reduce diesel prices by approximately 8.6 cents per litre (including VAT), and marked diesel by around 5.9 cents per litre.
Based on calculations by LETA, average diesel prices at major fuel station networks in Latvia have increased by about 40% since the escalation of the Middle East conflict on 28 February this year, while the price of 95-octane petrol has risen by nearly 20%.
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