On Monday, 8 July, the Saeima adopted in the final reading amendments to the Law on Excise Duties stipulating that the excise duty rate on strong alcoholic beverages shall be reduced starting from 1 August.
The duty will be reduced by 15 % and will amount to 1 564 euros per 100 litres of absolute alcohol. The current rate is 1 840 euros, which will be increased to 2 025 euros per 100 litres of pure alcohol from 1 March 2020.
“This measure is only intended to be a short-term solution in reaction to Estonia’s decision to reduce excise by 25 % on specific drinks – beer, cider and strong alcoholic drinks – starting from 1 July. We are taking this step solely to stabilise and protect our economy, the state budget and economic operators in view of the sharp drop in revenues to be expected,” Mārtiņš Bondars, Chair of the Budget and Finance (Taxation) Committee responsible for the amendments, had said earlier.
The amendments establish that the reduced rate shall be applicable until 29 February 2020.
According to the annotation of the draft law, the amendments to the Law on Excise Duties were put forward because changes in the neighbouring country’s alcohol market will have a negative impact on the economic activity of Latvian operators and the turnover of alcoholic drinks, in particular in the border area near Estonia. The Ministry of Finance estimates that the negative impact on the state budget would amount to 92 million euros and in order to maintain competitiveness and the internal market it was proposed to reduce the rate on strong alcoholic beverages by at least 15 percent. As a result, the negative fiscal effects are to be reduced to 32 million euros.
Saeima Press Service