Lithuania to Consider Reduced VAT Rate on Non-Prescription Drugs

Lithuanian Parliament has passed a project to change Bill No. XIVP-408 in order to apply a reduced VAT rate on non-prescription drugs and medical aids.

As of now, the standard 21% value added tax is applied to non-prescription drugs in Lithuania. It is suggested that the VAT rate should be cut to 5%. A reduced VAT is currently applied to prescription drugs and medical supplies covered by the Lithuanian government.

Lithuanian Parliament will consider the Bill later this year, and it should be adopted by December 31, 2022.

According to the initiators of this Bill, the changes should make medication more accessible, reduce patient discrimination and improve the state of public health as a result. The authors of the Bill highlight that currently, patients who are not eligible for prescription drugs yet but need medication have to buy the drugs at full price and pay a higher VAT in comparison to the prescription drugs.

The Bill has been being reviewed and amended since last year. It has also experienced pushback from several Members of Parliament due to expected budget losses related to the reduced VAT. Some Members of Parliament also argued that Lithuanians already buy too much medicine, which is linked to increased waste and irresponsible drug consumption.

Corporate Tax