On Thursday, the Saeima referred a draft law on introducing a solidarity payment for fuel retailers to the Budget and Finance (Tax) Committee for consideration.
Ministry of Economics proposes applying a solidarity payment to fuel retailers if their actual retail price exceeds the objectively calculated reference retail price by more than 3%.
According to the draft law prepared by the ministry, if a retailer’s fuel price exceeds the calculated reference retail price by more than 3%, the revenue above this threshold will be included in the solidarity payment base, applying a 100% rate.
At the same time, the solidarity payment will not be applied if the retailer can document that the actual fuel procurement costs during the relevant period exceeded the procurement price used in calculating the reference retail price by more than 3%. In such cases,
the taxable base will be reduced proportionally to the documented excess in procurement costs.
The ministry notes that the draft law, titled “Fuel Retailers’ Solidarity Payment Law,” is designed to mitigate the negative socio-economic impact on the economy caused by rapid increases in fuel retail prices, as well as to ensure additional revenue for the state budget to strengthen supply security and cover related fiscal needs.
The solidarity payment will be a temporary mechanism, applied only when fuel retail prices significantly exceed changes in global oil product prices, thereby providing additional funds and reducing the impact of rising fuel prices, the ministry explained.
The draft law is intended as a short-term, emergency, and proportionate solution addressing specific risks in the fuel retail market and is directly aimed at protecting consumer interests. It is currently set to remain in force until December 31, 2026. The mechanism will not be activated immediately upon the law’s entry into force but will be triggered by Cabinet regulations specifying the application period and technical parameters, including the methodology for calculating the reference retail price.
The ministry emphasized that the reference retail price will include all key cost components,
such as fuel procurement, delivery, storage, logistics, and other relevant factors. This price will be calculated and published weekly by a designated institution.
According to the ministry, the reference price allows retailers to earn a profit, as the solidarity payment targets only excessive mark-ups. If the retailer’s actual price exceeds the 3% tolerance margin, the entire amount above this threshold will be taxed at a 100% rate.
In such cases, retailers will be required to pay the solidarity contribution to the state budget to offset costs associated with rising fuel prices and other fiscal needs.
Retailers will be required to submit a solidarity payment declaration when a payment obligation arises.
The calculated amount must be paid into the state budget by the 23rd day of the following month.
Retailers will also need to submit supporting documents—such as fuel purchase invoices, customs declarations, and payment declarations—to Possessor, which will administer the system.
Possessor will oversee the calculation and payment of the solidarity contribution and compare declared retail prices with the reference price. It will cooperate with the Consumer Rights Protection Centre (PTAC), which has the authority to request information, conduct inspections, and review consumer complaints.
If discrepancies are found, Possessor will issue a payment notice, including late payment penalties of 0.05% per day. Payments must be made within ten days of notification.
Retailers providing false information, failing to submit data, or avoiding payment may face administrative penalties
imposed by PTAC.
The law is expected to come into force the day after its promulgation.
The draft law had previously been submitted for consultation until the 10th of April and received several objections. These were submitted by the Foreign Investors’ Council in Latvia (FICIL), Employers’ Confederation of Latvia (LDDK), the State Chancellery, the Ministry of Climate and Energy, and the Latvian Fuel Traders Association (LDTA). Meanwhile, several institutions—including the Ministry of Finance, the Competition Council, and the Ministry of Justice—submitted proposals to improve the draft.
The executive director of the Latvian Fuel Traders Association, Ieva Ligere, stated that fuel retailers fundamentally oppose the proposal, arguing that it contradicts free market principles and may pose constitutional risks.
“This is not about a windfall profit tax—it is pure price regulation. It is a political initiative in a pre-election environment. Fuel retailers see no economic justification for it, nor has there been a proper economic assessment,” Ligere said.
She explained that the draft law effectively attempts to regulate prices largely determined by factors beyond retailers’ control, as approximately 93% of fuel prices consist of procurement costs and taxes, while only about 7% is subject to retailer influence.
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