Latvian authorities sign an agreement with retailers and manufacturers to reduce VAT in shops

Latvia's economy ministry on Friday signed an agreement with grocery retailers and manufacturers to ensure that the value added tax (VAT) on a number of basic products will be fully reduced from 21% to 12% in shops from 1 July this year.

The aim of the agreement is to ensure that the reduction in the VAT rate from 21% to 12% on bread, milk, freshly chilled poultry and eggs is fully reflected in final prices in shops.

An addendum to the Memorandum of Understanding on Food Trade was also signed. The aim of the memorandum is to promote the availability of basic food products to the Latvian population by expanding the range of products included in the basket of low-cost products, by improving the recognition and visibility of these products, and by encouraging a change in consumer habits so that consumers choose products from Latvian producers on the basis of more detailed information.

The parties agreed to expand the basket of low-cost products by adding additional products to the ten existing product categories.

Janis Dubultas, Executive Director of the Association of Latvian Food Traders, said the association supports practical mechanisms to help shoppers pay less for food. He assured that the association's members will secure a reduction in the VAT rate on goods from 1 July.