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Saeima discusses VAT reduction for Latvia's catering companies

After repeated calls by catering companies to reduce value-added tax (VAT) on catering, the Saeima Business Development Sub-Committee discussed it Monday, September 18, and believes this could be done at least temporarily, Latvian Television reported.

The catering industry has lost about 5,000 employees since the Covid-19 pandemic. Companies have become smaller, and debts have increased – around EUR 45 million.

“There are two “70%” that are very sad for our industry – 70% of our catering businesses have tax debts. Bigger or smaller. And the second indicator is – tax debts have increased by 70%, if we compare the time before the Covid with this moment,” said Jānis Jenzis, President of the Latvian Society of Restaurants.

To allow caterers to recover from the “prolonged crisis,” the proposal is to reduce VAT to 12%. This practice already exists in more than 80% of European Union countries.

“Together with the industry, we have also gone through the data several times. Experts have also been attached, and [we've] realized that a temporary reduction in the VAT rate, much like in most European Union countries, which is nothing new, can give a kick-off to the industry to survive,” said Artūrs Butāns (National Alliance).

The idea was opposed by the Ministry of Finance.

“The position of the Ministry of Finance so far was that we want to see as few exceptions as possible. The broader the base, the better. We do not support the reduced rate, but of course it is also a political decision,” said the Ministry representatives.

But the sub-committee came to the conclusion that there were no other proposals to help the caterers.

“I conclude that we as the sub-committee stick to the view that the 12% term VAT cut is supportable, it is justified,” Butāns said.

The matter has been referred to the Economic Committee for assessment.

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