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Ceturtdiena 02.04.2020 | Name days: Imgarde, Irmgarde
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Latvian Saeima decides to reduce planned excise tax rise for alcohol

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alcohol, tax, changes, Latvia, SaeimaThe increase of excise tax rate for alcoholic beverages planned for 1 March will be more moderate. This much is provided by amendments to the Law on Excise Duties approved in the final reading by the Saeima on Thursday, 20 February, as reported by Saeima’s press-service.

Excise tax rate as of 1 March will be increased by an average of 5%. Similar growth rate is planned for 2021. Saeima’s Budget and Finance (Taxes) Committee chairman’s associated Iveta Benhena-Bēkena had previously said about amendments that the previously planned excise tax rate for alcoholic beverages would have reduced the industry’s competitiveness among other Baltic States.

«Decisions should be pragmatic, justified and proportional. These amendments are important because data for the last quarter shows a clear reduction for domestic market sales. This means it is necessary to react to Estonia’s excise tax policy,» says Benhena-Bēkena, adding that the supported proposal provides for a more moderate rise of the rate.

Read also: Estonian residents continue actively purchasing alcohol in Latvia

Amendments to the law were proposed because as of 1 March 2020 the most rapid increase of the excise tax rate would increase for strong alcohol – 29.5%, whereas the rate for beer, wine, fermented beverages with alcohol strength of up to 6% vol. and the growth rate for intermediate products would be 10%, the annotation mentions.

«Preserving such tax rate would reduce planned budget revenue by approximately EUR 30 million annually.»

For wine, fermented beverages with absolute alcohol strength above 6% vol. and intermediate products with alcohol strength up to 15% vol. planned at EUR 106 per 100 litres as of 1 March 2020. Previously it was planned to set the rate at EUR 111.

The excise tax for beer for every percentage by volume of absolute alcohol per 100 litres is planned to be set at EUR 7.8 instead of EUR 8.1, whereas for intermediate products with absolute alcohol volume above 15% vol. to 22% vol. the tax rate per 100 litres is planned at EUR 176. Previously this tax rate was planned at EUR 185.

For other alcoholic beverages the tax increase per 100 litres of absolute alcohol volume is planned at EUR 1 642 instead of the previously planned EUR 2 025.

It is planned that the excise tax rate increase for strong alcohol per 1 litre would increase the portion of the excise tax together with VAT would increase EUR 0.38 this year and EUR 0.40 in 2021. For wine, the tax portion would increase EUR 0.06 per 1 litre every year. The tax portion for beer would increase EUR 0.03 per 1 litre.

Excise tax law amendments will come to force on the next day after promulgation.


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