The turnover of vegetable and fruit growing in Latvia increased by more than 9% after the VAT on fruits and vegetables was lowered. According to the parliamentary secretary of the Ministry of Agriculture of Latvia, Ringolds Arnitis, compared with last year, when VAT was 21%, revenues increased by almost 13 million.
At the moment, the tax on fruits and vegetables in Latvia is 5%. The rate applies to washed, peeled and packed fresh fruit.
Innovation is also a positive influence on the farm economy. Edite Strazdina, member of the board of the Peasant Seim, said that people began to prefer local rather than imported products. Furthermore, the reduced VAT rate has contributed to the fight against the shadow economy: it makes no sense to trade imported vegetables and fruits in the street, buying them without paying VAT and selling without a check.
Fruitnews.ru quoted the head of the Latvian Association of Merchants, Henriks Danusevich, as saying: “Somewhere, purchases from local suppliers increased by 15%. This is more due to the fact that thanks to this price reduction, local suppliers were able to reduce prices for the supply of products to stores - now it is 1.04 euros. If the tomatoes had cost 1.49, now they sell for 1.14 euros."
The reduced VAT on vegetables and fruits is valid from January 1, 2018 to December 31, 2020.
