Government in favour of a VAT relief only for farmers' agricultural income

The government on Wednesday approved a proposal to adjust the Personal Income Tax (PIT) exemption for farmers, adopted in June, to apply only to agricultural income from next year.

This conclusion of the Cabinet of Ministers will be submitted to the Seimas.The Ministry of Finance has proposed to approve the amendments to the Law on Personal Income Tax initiated by a group of members of the Seimas. 

„It is clarified that the benefit is only available to farmers from agricultural income and not from all income. The amendment is much needed and solves a huge problem, and with its adoption, the package of tax changes adopted in the last session of the Seimas can be considered as finally completed“, – said Finance Minister Kristupas Vaitiekūnas at the meeting. 

The current regime provides for separate tax rates for farmers' income without specifying how they would apply to non-agricultural income. 

With the adoption of the amendments, the tax rates of 15% and 20% will be reduced to 15% and 20% respectively. The 20/20 and 20/20 rates would apply only to income from agricultural activities, including income from the sale of agricultural property. This income would be excluded from the other income subject to progressive tax rates of 20, 25 and 32%.

BNS wrote that the aim is to exclude people who do not receive income from agriculture, but only those with a farmer's certificate. These amendments to the VAT law were approved by the Seimas in October after submission.

As BNS wrote, after farmers expressed their dissatisfaction with the tax changes being discussed in the Seimas, the Parliament agreed in June that all those who have a farmer's certificate, but are not necessarily engaged in farming, would be subject to the 15 % and 20 % tax rates. The rates of GPT are also higher than the rates for farmers who are farmers.