Changes proposed to excise tax rules affecting alcohol and other changes made to VAT law

On 20 April 2021, the Latvian Cabinet of Ministers approved a proposed amendment to the excise tax law that would abolish the tax payment deadline of 180 days for received excise duty stamps relating to alcohol. Instead, excise tax would be paid on the number of alcohol units marked by the excise duty stamps for consumption or released for free circulation and not on stamps acquired. The changes also would make it possible to dispose of excise duty stamps without removing them from the packaging and to receive a refund on the excise duty paid. The bill still must be approved by various ministries and institutions, but the changes are expected to take effect on 1 July 2021.

The following changes have been made to Latvia’s VAT rules:

A reduced VAT rate of 5% (rather than the standard rate of 21%) will continue to apply to certain fruit, berries and vegetables during the period 1 January 2021 to 31 December 2023.
The 30-day deadline for the Latvian tax authorities to assess and refund overpayments of VAT, which was introduced in 2020 as a COVID-19 relief measure, will be maintained. Previously, the tax authorities had broad powers to extend the 30-day assessment period and a reimbursement of overpaid VAT was automatic only if certain criteria were met.
From 9 January 2021, the supply of COVID-19 vaccines registered in accordance with the laws regulating the pharmaceutical industry and for the provision of services closely related to COVID-19 vaccines (e.g. transport, storage, etc.) are zero-rated for VAT purposes. The zero rate also applies to the supply of medical devices used for COVID-19 in-vitro diagnostics (that are recognized in the EU) and to the local provision of services closely related to such devices.

Artūrs Radziviļčuks
arturs.radzivilcuks@bdo.lv