5% VAT on fresh fruit, vegetables and berries is proposed again

The amendments were signed, among others, by the President of the Seimas, Saulius Skvernelis, and the Minister of Economy and Innovation, Lukas Savickas. 

The implementation plan for the provisions of the government programme provides for a reduced VAT rate of 9% on organic fruit, berries and vegetables certified under the national food quality system. 

The authors of the amendments say that, based on the experience of Latvia, Poland, France and Germany, the preferential VAT on fruit and vegetables can promote healthier diets, the development of local agriculture, and the reduction of the shadow market.

Paul Andriejavas, chairman of the board of the Lithuanian Vegetable Association, has previously told BNS that the sector is in favour of reducing VAT on fruit and vegetables, as it would stimulate vegetable consumption, increase the area under cultivation, and employ more people in the sector.  

At the same time, some economists warn that the benefits of such a move are short-lived and will not be felt by consumers as prices return to their previous levels.

Prime Minister Gintautas Paluckas has said that there is not much room in next year's budget for various tax breaks, while Finance Minister Rimantas Šadžius has said that there is no room at all. 

The preferential VAT rate on fruit, vegetables and berries has been proposed several times before. In 2017, when Lithuanian farmers were badly affected by heavy rains, a 5% rate was proposed for their produce for three years until 2021. At the time, the Ministry of Finance estimated that the reduced rate would result in a loss of €135 million in revenue for the budget.

A year later, the aim was to introduce a 9% tariff. The then Prime Minister Skvernelis doubted whether prices would fall.

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