The Seimas (parliament) on Thursday paved the way for keeping the reduced 9-percent VAT rate on heating in 2014 and the reduced 5-percent rate on medicines and medical aids for an indefinite period with 102 votes in favor and five abstentions.
These tax breaks are estimated to cost around 384 million litas (EUR 111.3m) in foregone annual budget revenues.
The Seimas agreed, without voting, that the reduced 9-percent VAT rate on hotel services would apply from 2015, instead of 2014. Also, the MPs rejected a proposal to levy a reduced 5-percent rate on frozen meat.
President Dalia Grybauskaitė stated on Thursday, probably referring to the Labor Party, that one of the partners of the ruling coalition was interested in a tax break on meat. She stressed that such a tax break would be a “gift” of 200 million litas to the one concerned.
“And when we talk specifically about the reduced VAT rate on meat, we know perfectly well that one of the partners of the ruling coalition has a direct interest in that. It’s as if the other coalition partner wants to give a present of 200 million litas – the cost of the reduced VAT rate on meat – to one of its partners,” she said at a news conference in Brussels on Thursday.
Vikonda, company run by the family of Viktor Uspaskich, former leader of Lithuania’s Labor Party, owns meat processing company Krekenavos Agrofirma.
The standard VAT rate in Lithuania, at 21 percent, has been unchanged since the fall of 2009.