In Riga yesterday, the government decided to approve differential value-added tax (VAT) rates for pharmaceuticals and medical goods, educational, scientific and children's books, the mass media, specialized products for infants, hotel services, water supply, sewage and waste disposal, funeral services.
Charging these goods and services, currently zero-rated, VAT of 9 per cent, will bring additional budget revenue of over 2.6m lats. The government will pass the revenue from VAT on pharmaceuticals and medical goods to the health care sector.
The Cabinet of Ministers required the Finance Ministry to submit a bill amending the law on VAT in order to create a unified, single rate of VAT from 2003, in order to comply with the EU 6th Directive.
The current legislation exempts various goods and services from VAT which should in fact bear the tax, according to the Directive. Latvia will allow these exemptions to remain until December 2002, when they will have to go.
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