In 2026, the excise tax will increase for a number of goods, while at the same time, to curb the rise in food prices, it is proposed to reduce the value-added tax (VAT), writes Dienas Bizness.
Changes are also planned for the taxation of dividends received by individuals.
The consideration of the state budget project for 2026 and related bills in the Saeima is ongoing; however, the level of prices for goods and services next year will be determined by previously made decisions regarding the gradual increase of tax rates.
Jānis Taukāčs, a partner at the law firm "ZAB Sorainen" specializing in tax and customs issues, notes that currently the hottest debates in the Saeima and society are not about the budget and tax policy, but on other topics. Important changes affecting all residents of Latvia and individuals who own shares in companies have remained in the shadow of these emotional discussions, should the parliament approve the changes.
Currently, amendments to the VAT law are being considered in parliament, which provide for the introduction of a reduced tax rate of 12% for a number of food products from July 1, 2026, to June 30, 2027: bread, milk, poultry meat, and eggs.
"At first glance, this is great news for buyers and retailers, but whether and how prices will change will be shown by time," says the expert.
He notes that Latvia will thus join those EU countries where a reduced VAT rate applies to food products, as currently in Latvia the 12% rate is only applied to fresh fruits, berries, and vegetables.
Taukāčs also considers the planned changes in corporate income tax and personal income tax payments to be significant. The government proposes to introduce an alternative model (voluntary to choose) if the shareholder of a Latvian enterprise is an individual.
