On Monday, the parties of the ruling coalition in Latvia reached an agreement to extend indefinitely the preferential 12% value added tax (VAT) rate on fresh fruit, berries and vegetables.

Announcing the announcement, Agriculture Minister Armands Krause stressed that this reduction in the VAT rate, which has been temporary until now, is aimed at enabling the public to consume more healthy products.

The preferential VAT rate of 5% on such products was introduced in the country from 2018 until the end of 2023. Last December, a 12% rate was introduced for 2024, although the full VAT rate (21%) was originally planned for this year.

Amendments to the VAT law submitted for approval by the Ministry of Finance last week provided for the extension of the preferential VAT rate on fresh fruit, berries and vegetables until the end of 2028.

The ministry estimates that this will cost the state budget €17.1 million next year, €19.1 million in 2026, €23.4 million in 2027 and €24 million in 2028.