Estonia: Retailers claim VAT on locally produced food could be cut

Several retailers in Estonia have stated that consideration could be given to lowering the rate of value-added tax (VAT) on locally produced food.  According to Rimi Eesti manager Vaido Padumae, more and more foodstuffs of local origin are being bought in Estonia, but Estonians continue to be rather price-sensitive. Lowering the VAT on locally produced food could be one possible way of improving the situation.

"In Estonia VAT on food is among the highest in Europe. VAT on food is higher still than in Estonia only in Lithuania and Denmark," he said, adding that in some countries, such as Britain, no VAT at all is levied on foodstuffs.

Asked for a comment, spokesman for Coop Eesti Martin Miido said that lowering VAT on food items is one of the fastest and most effective ways of improving the everyday coping of residents as well as an opportunity for the state to direct people's eating habits. Miido said that a zero VAT rate on fresh fruits and vegetables would motivate people to buy them more.

Baltictimes.com reported on the manager of Maxima Eesti, Edvinas Volkas, saying that the retailer welcomes all steps that could eventually lower the prices of food items and basic necessities and help families better cope with day-to-day expenses.

The uniform VAT rate of 20 percent valid in Estonia is applied also to food.


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