Latvia Plans New VAT Reductions for Books and Food in 2026

The Latvian government proposed amendments to the VAT Law to adjust the scope of reduced VAT rates for publications, including language-based products and certain food products. In addition, a one-year pilot project is planned to temporarily apply a reduced VAT rate of 12% to certain essential food products. The proposal is part of the 2026 Budget Law and 2026-2028 multi-year budget framework.

The Scope and Impact of Proposed Amendments

Regarding the introduction of language-based criteria for applying the reduced 5% VAT rate to books, press, and other publications, if the proposal is approved and adopted the reduced 5% VAT rate will only apply to publications issued in Latvian, Latgalian, or Livonian, as well as in the official languages of the EU, European Economic Area, Switzerland, EU candidate countries, and OECD member states.

The primary purpose of the measure is to strengthen the role of the Latvian, Latgalian, and Livonian languages, supporting their preservation, development, and visibility in both the cultural and informational landscape. Additionally, by extending eligibility to publications in the official EU languages and international organizations, the amendments seek to maintain linguistic diversity, cultural accessibility, and democratic engagement.

The pilot project is planned to run from July 1, 2026, to June 30, 2027. During this period, the 12% reduced VAT rate will be extended to all types of bread, including rye, wheat, and gluten-free varieties, fresh, sterilized, or pasteurized milk, except ultra-sterilized milk, fresh chilled poultry meat such as chicken, turkey, duck, goose, guinea fowl, and quail, and fresh poultry eggs in shells.

Currently, most of these products are subject to the standard VAT rate of 21%, while the 12% rate applies only to baby food and fresh fruits, berries, and vegetables typical of Latvia. The proposed measure is a direct response to high food prices, which have had a disproportionate effect on socially vulnerable groups and weakened local producers’ competitiveness as many consumers turn to cheaper imported alternatives. 

Conclusion

If adopted, the reduced 5% VAT rate will apply to books, press, and other publications that qualify under the language-based criteria starting January 1, 2026. On the other hand, the Latvian government intends to use the pilot project to assess how a lower VAT rate influences retail pricing, consumer purchasing power, and the competitiveness of domestic producers and retailers. Regarding the impact on the state budget, it is estimated that applying a 12% reduced VAT rate to certain food products will result in a loss of around EUR 32 million.

Source: KPMG