The hospitality industry across the Baltic states of Latvia, Estonia, and Lithuania has united in a call for a reduction in Value Added Tax (VAT) as they grapple with post-pandemic challenges. Andris Kalniņš, head of the Latvian Hotel and Restaurant Association, emphasized on national television that Latvia lags behind other EU nations in attracting foreign tourists. The country has suffered a 15-20% decrease compared to pre-pandemic levels, and Kalniņš voiced his frustration with the lack of governmental support. This neglect has led to a worrying increase in vacant retail spaces in the Old Town, which he sarcastically dubbed a new “restaurant chain” – Space for Rent.
Industry leaders in Latvia are advocating for a VAT reduction not just for restaurants but for the entire catering spectrum. This includes cafes, pubs, bars, canteens, and even school and hospital catering services. They argue that this tax relief would address broader issues plaguing the sector. Despite ongoing efforts since 2018, the shadow economy persists, exacerbated by the State Revenue Service’s resistance to lowering VAT. The hospitality sector believes that a lower VAT rate would help curb the shadow economy by allowing legitimate businesses to thrive, thus reducing the incentive for tax evasion.
Cross-Border Protests Reflect Unified Struggle
The hospitality industry in Latvia, Estonia, and Lithuania is calling for a reduction in Value Added Tax (VAT) to tackle post-pandemic challenges. Andris Kalniņš, head of the Latvian Hotel and Restaurant Association, highlighted on national television that Latvia trails behind other EU countries in attracting foreign tourists, suffering a 15-20% drop from pre-pandemic levels. Kalniņš expressed his disappointment with the government’s lack of support, which has resulted in more vacant retail spaces in Old Town, humorously referred to as a new “restaurant chain” – Space for Rent.
Latvian industry leaders are pushing for a VAT cut not just for restaurants but across the entire catering sector, including cafes, pubs, bars, canteens, and even school and hospital services. They believe that such tax relief would address several broader issues within the industry. Despite their efforts since 2018, the shadow economy remains a problem, worsened by the State Revenue Service’s resistance to lowering VAT. The hospitality sector argues that reducing the VAT rate would foster legitimate businesses, helping them thrive and reducing the incentive for tax evasion.
