Industry repeatedly pushes for reduced VAT on catering in Latvia

The initiative to introduce reduced value-added tax (VAT) in the amount of 12% for public catering will continue to be viewed next week by the Saeima budget and Finance (tax) Commttee, deputies decided on Wednesday, LETA reports.

Andris Kalniņš, author of the initiative and head of the Latvian Association of Hotels and Restaurants (LVRA), said that the aim of the initiative is to make catering services more accessible to the wider public, as well as to reduce the shadow economy in the sector. He said that it was not just about restaurants, it was about the whole catering sector, including bars, canteens, cafes and other services.

Kalniņš noted that in most European Union (EU) countries, the reduced VAT rate is applied to public catering, including temporary practice in Lithuania. “Latvia is one of the few countries that has not implemented this,” Kalniņš said, adding that elsewhere in the EU it was concluded that reducing the VAT rate for public catering also builds the productivity of residents.

The head of LVRA also said that the reduced application of VAT to public catering would contribute to the overall development of the sector, including increased turnover, profit margins, as well as it would be possible to employ more people, offering more likeable remuneration.

The President of the Commission, Janis Reirs (JV), said it was important for the public to be aware that this initiative would not reduce the price of catering services, but would contribute to the payment of taxes. "We will be left with more money at the expense of price. More money for development, more money for remuneration, more money for maintaining the sector,” Reirs said, citing the application of reduced VAT to fruits and vegetables grown in Latvia as an example.

Deputies agreed to continue the initiative on introducing reduced VAT in the amount of 12% for public catering at the meeting of the Commission on Wednesday, May 15, while asking the Ministry of Finance and the Ministry of Economics to prepare calculations by Wednesday regarding the catering sector in Latvia to evaluate all available information regarding tax payments, shadow economy, employment indicators and other aspects of the sector.

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