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Lithuania heating and food VAT proposal

Inflation spike prompts bill to lower taxes on domestic heating

The Lithuanian government has agreed to cut the VAT rate on domestic heating to zero. This is now subject to confirmation by Parliament. The current VAT rate is 9%. The rate cut, if approved, would apply between 1 January and 30 April 2022.  There was discussion about cutting VAT on food, too, but now proposals yet.

Many other EU states are cutting VAT on fuel and food l.

The Baltic state has been badly hit by global supply chain and energy inflation – December 2021 inflation rose to 10.6% from November’s 9.2%.  This is the highest rate since 2008.

The surge in energy prices has by far been the most important component behind rising inflation rates in the euro area, Eurostat, the EU’s statistical office, announced on 7 January. Compared to roughly a year ago, energy price levels saw a 26% increase, followed by food, alcohol and tobacco (3.2%), non-energy industrial goods (2.9%) and services (2.4%).

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