Latvian parliament rejects multiple tax reduction proposals

On Thursday, 29 September, Latvia’s Saeima rejected multiple legislative drafts submitted by opposition deputies.
Proposed amendments to the Law on Excise Duties suggested changes for tax calculation for petrol products. For unleaded petrol, alternatives and components deputies proposed setting a rate of 359 EUR/1 000 l and for leaded petrol at 444 EUR/1 000 l. For diesel fuel the rate was proposed at 264 EUR/1 000 l.
Members of the opposition proposed adding changes by the end of next year.
The opposition also proposed amendment to the Law on Immovable Property Tax, suggesting lifting real estate tax from a private person’s sole residence and peace of land under 1 500 m2 in city or countryside territory or farmstead under 2 ha the total cadastral value does not exceed EUR 100 000.

The loss of real estate tax for municipal budgets was proposed to be compensated by the state, according to the legislative draft.

Amendments to the Value Added Tax Law suggested reducing VAT rate for medicines.
Other amendments to the law suggested applying 0% VAT on lumber fuels if it is used for household needs.

Opposition members also suggested setting 0% VAT rate for heating energy supplies. Amendments proposed reflecting this service with 0% VAT in residents’ bills.

Members of the opposition also suggested setting reduced VAT rate of 5% for public catering services, cultural events and exhibitions, as well as sports clubs and sports events.
A reduced 5% VAT rate, according to the opposition, should be applied to baby food, such as milk and other dairy products, soy products, juices, purées and other products intended for infants.
Members of the opposition also proposed amendments for the Law on Measures to Reduce Extreme Rise in Energy Prices, in order to provide end users – households and legal persons (municipal and state institutions included) – with reduced electricity supply fees, including VAT, and no mandatory procurement component and power component. The lost income of system operators is to be compensated from the state budget, the legislative draft suggested.
Politicians also suggested amending the aforementioned law in order for Latvia to leave Nord Pool exchange by the end of the year and install a fixed fee of 0.13 EUR/1 kWh (VAT excluded) starting with 2023.
Deputies also suggested setting VAT rate at 5% for electricity, heating energy, natural gas and fuel.