Latvia Agrees to Reduce VAT on Select Food Products

Latvia is taking a significant step towards easing the financial burden on its citizens by agreeing to a temporary reduction in the Value Added Tax (VAT) for essential food items. This initiative, spearheaded by the Ministry of Economics and the Ministry of Agriculture, demonstrates a clear commitment to supporting household budgets amidst economic pressures.

Effective from July 1, 2026, a reduced VAT rate of 12% will be applied to staple goods including bread, milk, poultry, and eggs. This measure, set to last until June 30, 2027, is a direct response to concerns about the affordability of basic necessities. The collaboration between government bodies and key industry players, such as the Latvian Food Retailers Association and the Chamber of Commerce and Industry, highlights a unified approach to tackling this issue.

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The Latvian Food Retailers Association supports practical mechanisms that help buyers pay less for food. The reduction of VAT is particularly important in this regard.

Jānis Dubultas, Executive Director of the Latvian Food Retailers Association, emphasized the practical benefits for consumers, stating, "The reduction of VAT is particularly important in this regard." However, he also issued a crucial reminder to suppliers, urging them to act responsibly and not exploit the VAT reduction as an opportunity to inflate prices. The success of this initiative hinges on the collective commitment of all parties involved to ensure the savings are genuinely passed on to the end consumer.

This agreement reflects Latvia's proactive stance in addressing cost-of-living concerns. By strategically adjusting tax policies on essential goods, the government aims to provide tangible relief, fostering a sense of economic stability and support for its population. The broad coalition of signatories signals a shared understanding of the importance of affordable food and a collective effort to achieve this goal.

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I can confirm that from July 1, our association members will apply the reduced VAT rate to the goods specified in the law – bread, milk, eggs, poultry. At the same time, it is important that suppliers also behave responsibly during this period and do not use the VAT reduction as an opportunity to raise prices.