RIGA - Fuel retailers are to be subject to a solidarity levy if their actual retail price exceeds the objectively calculated indicative retail price by more than 3 percent, according to a draft law submitted by the Economics Ministry.
According to the draft law, if the price of fuel set by the retailer exceeds the calculated indicative retail price by 3 percent, the amount of revenue above this threshold will be included in the solidarity levy base at a rate of 100 percent.
At the same time, the solidarity levy will not apply if the retailer can document that the actual cost of purchasing the fuel during the relevant period exceeded the purchase price used to calculate the indicative retail price by more than 3 percent. The solidarity payment base will then be reduced in proportion to the documented part of the excess of the purchase price.
The ministry noted that the bill has been drafted in order to mitigate the negative socio-economic impact on the economy resulting from the sharp increase in retail fuel prices, as well as to provide additional financial resources to the state budget to strengthen the security of national supply and to cover the related fiscal needs.
The solidarity payment will be a temporary mechanism that will only be applied if the retail price of fuel significantly exceeds development of oil prices on world markets, thus providing additional financial means to cover the related fiscal needs and mitigate the impact of fuel price increases, the ministry noted.
The solidarity payment for a fixed period is aimed at strengthening the security of national supply, mitigating the impact of fuel price increases and providing additional financial resources to cover the related fiscal needs. The solidarity payment will be applied to ensure that tax changes are adequately and timely reflected in retail fuel prices, as well as in cases where the retail fuel price increase significantly exceeds changes in the world market prices of petroleum products or where prices do not reflect tax changes.
An authority designated by the Cabinet of Ministers will calculate and publish on a website the indicative retail price for diesel and petrol on the first working day of each week. The calculation of the indicative retail price is to include all the main price elements of the fuel, such as the cost of purchasing the fuel, delivery, storage, logistics costs and other parameters.
The ministry noted that the indicative price ensures that retailers can make a profit as the solidarity levy will only target excessive mark-ups. If the actual price of the fuel charged by the retailer exceeds the 3 percent tolerance, the entire amount of revenue above this threshold will be included in the solidarity levy base at 100 percent.
In such cases, retailers will pay a solidarity levy at the statutory rate, which will be jointly and severally liable to cover the costs and fiscal needs associated with a sharp increase in fuel prices.
Retailers will be obliged to submit a declaration of solidarity payment at the time when it is established that there is an obligation to pay during the payment period.
Retailers will have to provide documentary evidence - fuel purchase invoice, customs declaration, solidarity payment declaration - to Possessor Public Asset Management (Possessor).
The law provides that the solidarity payment will be administered by the Possessor, which will control the calculation and enforcement of the payment and compare the actual retail price declared by retailers with the published indicative retail price. In order to ensure checks on retailers, Possessor will cooperate with the Consumer Rights Protection Centre, which has the right to request information and documentation from retailers, carry out inspections and handle consumer complaints.
The law is expected to enter into force the day after its promulgation.
As reported, on March 17, after a government meeting, Economics Minister Viktors Valainis (Greens/Farmers) told the media that a proposal to introduce a surtax on fuel retailers was being considered in order to monitor and limit mark-ups, ensuring that the fall in prices on world markets was reflected in the domestic market.
From April 1 to June 30, 2026, Latvia will apply a temporary reduction in excise duty on diesel fuel of around 15 percent, from the current EUR 467 to EUR 396 per 1,000 liters. The excise duty rate for labelled diesel used in agriculture will be EUR 21 per 1,000 liters.
According to the Finance Ministry, these changes could reduce the price of diesel by around 8.6 cents per liter including value added tax, and the price of labelled diesel by around 5.9 cents per liter including value added tax.
According to LETA's calculations, the average price of diesel fuel in Latvia's largest petrol station networks has increased by about 40 percent since the escalation of the conflict in the Middle East on February 28 this year, while the price of 95-brand petrol has increased by almost 20 percent.
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