Lithuanian Parlament Rejects a Foodstuffs VAT Exemption Proposal

Lithuanian Parlament rejected a proposed amendment to exempt food items from VAT. Earlier this year, a similar proposal to apply a reduced 9 per cent VAT rate on foodstuffs was also rejected. Currently, a reduced VAT rate in Lithuania is applied to catering and restaurant services. The existing reduction will be in place until the end of the year.

The proposals to reduce the VAT on foodstuffs were submitted after neighbouring Poland had agreed to implement a zero per cent VAT on food. The decision came in place in February 2022.

However, it seems Lithuania won’t follow in Poland’s footsteps and will continue implementing the standard VAT rate on food to retain the tax revenue. According to the estimates, applying zero VAT on foodstuffs could result in EUR 250 million loss in tax revenue. The Amendment's authors opposed the idea, claiming that reduced VAT could increase consumption and stabilize the incoming VAT volume.

Here is the proposed Amendment that was voted upon on June 23, 2022, in Lithuania:

Proposed change

Article 1 . Amendment of Article 19

Add the following point 4 to Article 19 (5):

” 4 ) foodstuffs. ”

The Amendment was returned to the initiators for refinement by another vote.

Some MEPs proposed that the VAT reduction should not apply to all food but only to the basket of essential products.

Corporate Tax