The Latvian government has approved a proposal by the Ministry of Economics of Latvia to introduce a solidarity levy for fuel retailers if their actual retail prices exceed the objectively calculated indicative retail price by more than 3%.
According to the draft law developed by the ministry, if a retailer’s fuel price exceeds the calculated indicative retail price by more than 3%, the revenue above this threshold will be included in the solidarity levy base and taxed at a 100% rate.
At the same time, the solidarity levy will not be applied if the retailer can document that their actual fuel purchase costs during the relevant period exceeded the purchase price used in calculating the indicative retail price by more than 3%. In such cases, the levy base will be reduced proportionally to the documented excess in purchase costs.
The ministry notes that the draft law, “Fuel Retailers’ Solidarity Levy Law,” has been developed to reduce the negative socio-economic impact caused by a rapid increase in fuel retail prices, as well as to ensure additional financial resources for the state budget to strengthen supply security and cover related fiscal needs.
The solidarity levy will be a temporary mechanism,
applied only when fuel retail prices significantly exceed changes in global oil product prices. This is intended to provide additional financial resources for related fiscal needs while mitigating the impact of rising fuel prices.
The draft law is designed as a temporary, emergency, and proportionate solution addressing specific risks in the fuel retail market and aimed directly at protecting consumer interests. It is currently planned that the law will remain in force until the 31st of December 2026. However, the mechanism will not be activated immediately upon the law entering into force—it will be implemented through Cabinet of Ministers regulations, which will define the application period and technical parameters, including the methodology for calculating indicative retail prices.
The ministry emphasizes that the indicative retail price will ensure that retailers can still make a profit, as the solidarity levy targets only excessive markups. If the actual retail price exceeds the 3% tolerance threshold, the entire revenue above that level will be included in the levy base and taxed at 100%.
A designated institution will calculate and publish the indicative retail prices for diesel and petrol weekly.
The calculation will include key cost components such as fuel purchase costs, delivery, storage, logistics, and other relevant factors.
Retailers will be required to submit a solidarity levy declaration once it is determined that payment is due. The calculated amount must be paid into the state budget no later than the 23rd day of the following month.
The law предусматривает that the administration of the levy will be carried out by Publisko aktīvu pārvaldītājs Possessor, which will monitor compliance, verify calculations, and compare declared retail prices with published indicative prices. To ensure effective oversight, it will cooperate with the Patērētāju tiesību aizsardzības centrs, which has the authority to request information, conduct inspections, and review consumer complaints.
If irregularities are found, the authority may require payment of the levy along with late penalties. A penalty of 0.05% per day will apply for delayed payments. Retailers must settle payments within ten days of receiving notification.
Retailers may face administrative liability if they provide false information,
fail to submit required data, or otherwise avoid payment obligations.
The law is expected to enter into force the day after its promulgation.
It should be noted that the draft law has received multiple objections from business and institutional stakeholders, including the Foreign Investors’ Council in Latvia, the Latvian Employers’ Confederation, the State Chancellery, the Ministry of Climate and Energy, and the Latvian Fuel Traders Association. Several institutions have also submitted proposals for improvement.
Representatives of the fuel sector argue that the proposal contradicts free market principles and may raise constitutional concerns. According to industry representatives, approximately 93% of fuel prices consist of purchase costs and taxes, while only about 7% is within the control of retailers. They therefore view the initiative not as a windfall tax, but as a form of price regulation without sufficient economic justification.
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