Seimas adopts VAT adjustments for farmers - progressive rates only for agricultural income

The Parliament is starting to discuss a proposal to adjust the preferential personal income tax (PIT) rates for farmers adopted in June, with the aim of preventing people who do not receive any income from agriculture, but only those who have a farmer's certificate, from benefiting from the benefits.

The amendments to the GPT law were approved by 76 members of the Seimas on Tuesday, with one vote against and six abstentions.

According to the initiators, a loophole was left in the package of tax amendments adopted by the Seimas regarding the VAT exemption for farmers, and it is therefore proposed that from next year, the rates of 15% and 20% should apply only to agricultural income, including from the sale of property used in this activity.

„The proposed adjustments would be in line with the real objectives of the regulation proposed on 26 June, which is to establish separate taxation conditions for income from agricultural activities and at the same time to harmonise the mechanism of tax credits“, &ldash; said one of the authors of the amendments, Social Democrat Matas Skamarakas, at the Seimas session.

The 15% rate would apply to annual agricultural income up to 60 average wages (AWW), and 20% to income above 60 AWW.

Conservative Gintarė Skaistė said the amendments are being proposed before the laws themselves even enter into force. She said it was unclear why they were being tabled despite the six-month entry into force rule, and the draft would need the government's opinion, as it was a draft tabled by MPs, not the Cabinet of Ministers.

BNS wrote that after farmers expressed their dissatisfaction with the tax changes under consideration in Parliament, Parliament agreed in June to apply the 15% and 20% tax rates to all persons holding a farmer's certificate, but not necessarily engaged in farming activities. The rates of GPT should be set at 20 per cent and 20 per cent respectively.

Finance Minister Kristupas Vaitiekūnas has said that the relief is to be adjusted, but the approved rates for farmers will remain unchanged. 

Prime Minister Inga Ruginienė and President Gitanas Nausėda have both spoken out about the need for such a correction. 

Standard VAT rates will be 20, 25 and 32% from next year