Survey: Majority supports reduced VAT on catering in Latvia

Take note – story published 1 year ago

A reduction of the value-added tax (VAT) rate for public catering from 21% to 5% or 12% is supported by 83% of Latvian residents, according to a survey conducted by the Latvian Restaurant Society (LRB), the Latvian Hotel and Restaurant Association (LVRA) and the public opinion research center SKDS in March this year, LSM's Latvian language service reported.

The SKDS survey involved 1,005 respondents aged 18 to 75.

10% of the population rather or certainly don't support reducing the VAT rate on catering businesses, while 7% did not answer the question, according to the survey.

LRB President Jānis Jenzis stated: "The results of the survey clearly show that the majority of the public believe that the catering industry deserves the introduction of reduced VAT. People travel and see the VAT they and, consequently, catering companies pay in other countries. And in almost all European countries, it is much lower than in Latvia. Accordingly, it reflects directly on both internal and external tourism. The latest Eurostat data shows that tourism figures in the European Union as a whole have reached almost before the pandemic figures last year, but not in Latvia."

75% of the population surveyed would certainly or rather support the reduction of so-called “envelope wages”, or payment in cash to evade taxes, in the catering sector.

The results of the survey show that 6% of residents eat in public catering institutions every day or almost every day, 11% do it at least 2-3 times a week and another 14% do it about once a week. Meanwhile, 37% of the population eat out a few times a month or less, and 33% – very rarely or never. The survey also shows that 20% of the population have worked in the catering sector.

LVRA President Andris Kalniņš said: “Unfortunately, the catering industry has suffered the hardest in recent years. For this reason, catering companies have incurred tax debts of more than EUR 45 million [both deferred and current], which have a significant impact on their future development and viability. […] It is also worth noting that the reduced VAT rate was introduced in Lithuania during both the Covid-19 pandemic and extended until the end of this year, which makes Latvian catering entrepreneurs uncompetitive vis-à-vis our neighboring entrepreneurs."

To consolidate forces in the representation of the interests of the hospitality sector and to promote business development, including effectively addressing problems related to the unduly high tax burden, red tape of public authorities, labor shortages, and unfair competition, LRB and LVRA have signed a memorandum of cooperation.


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