Updated calculation of the application of the reduced VAT rate in the fruit and vegetable sector Source of funding LAOCC Scientific leader Irina Pilvere Duration 2017 Budget 9 075 EUR Project description This work is to prepare ex-ante evaluate for the possible reduction of the Value Added Tax (VAT) rate from 21% to 5% for certain food products – some types of fresh fruits, vegetables, berries and potatoes. Several tasks were performed: estimation of the expected price decrease for the group, evaluation of the possible increase in consumption, evaluation of the possible impact of the VAT rate reduction on the state budget. For the calculations model from the previous research is used, but with addition of the shadow economy sector. This research results convinced policy makers to reduce VAT rate for the mentioned goods for the period of 3 years.
