Implementation of Reduced VAT Requires Careful Preparation from Retailers

Since July 1, Latvia has been applying a reduced 12% value-added tax (VAT) rate to certain basic food products: bread, fresh milk, fresh poultry meat and eggs. Raimonds Okmanis, Chairman of the Board of SIA “Latvijas Tirgotāju savienība” (LaTS), stated that implementing these changes required careful preparation and precise work across the entire retail network.

Key tasks included accurate classification of products according to the new regulations, adjustment of cash register and accounting systems, replacement of price tags, and updating information systems. This was particularly challenging in smaller stores with limited staff. For the LaTS network, the challenge was compounded by its wide coverage across Latvia – the network unites hundreds of retail outlets that needed a uniform approach to the VAT changes.

According to Okmanis, the transition process highlighted the importance of centralized coordination and timely communication with network members. For small and medium-sized stores, each regulatory change means additional administrative burden, so LaTS aimed to ease the process as much as possible. Although the new VAT rate applies only to specific product groups, the practical implementation was much broader, including updating product databases and informing employees.

The industry notes that such changes require not only financial investment but also significant time resources. Despite the complexities, LaTS considers the transition to reduced VAT to have been generally successful – consumers saw changes from the first day, and store operations were not disrupted. At the same time, retailers acknowledge that in the future, earlier availability of regulations and methodological guidelines would be desirable to reduce administrative burden, especially for small and medium-sized enterprises.

LaTS was founded in 2007 and currently unites about 270 companies with over 700 retail locations across Latvia.