Latvian excise duties to be gradually raised from 2024

RIGA - Starting in 2024, Latvia will gradually raise excise duties on alcohol, tobacco, e-cigarettes and related products as well as some oil products that are used in special economic zones (SEZ) and freeports, according to draft amendments to the Law on Excise Duties. 

The amendments have been drafted on the basis of the report "On the progress in the development of the National Tax Policy Guidelines for 2024-2027", which was heard at the government's meeting on September 26, and the task to submit draft amendments to the Micro-enterprises Tax Law to the government as part of the legislative package accompanying the draft law On the State Budget for 2024 and Budget Framework for 2024, 2025 and 2026.

The Finance Ministry argued that government revenue must be increased to ensure the full functioning and development of state functions, including additional funding for health, internal and external security and the development of the education system.

Excise duty on cigarettes and other tobacco products will be raised over a period of three years, with the first increase planned for March 1, 2024. In 2025 and 2026 the excise duty on tobacco will be upped on January 1. It has been proposed to increase the tax rate on cigarettes by an average of 5.6 percent per year, or EUR 0.14-0.2 per pack of cigarettes per year. 

The draft law provides for the excise duty on products in the group "other alcoholic beverages" to be increased by 5 percent annually for the next three years, while the excise duty on other groups of alcoholic beverages (beer, wine, fermented beverages and intermediate products) is to be increased by an average of 10 percent annually for the next three years. The tax hikes on alcoholic beverages are scheduled for March 1, 2024, March  1, 2025 and March 1, 2026.

The draft law provides for a gradual increase in excise duty on oil products used in fixed installations, cranes and similar objects in SEZ territories and freeport territories, equipment used for construction works in the SEZ territories and freeport territories, as well as machinery which by its design is not intended for traffic on public roads.