Lots of new VAT benefits registered in the Seimas – valid for cinemas, sports clubs, events: they would cost millions to the budget | Business

The reform to the Value Added Tax Law, registered on Tuesday, was signed by representatives of all factions. This proposal will be discussed in the Seimas Budget and Finance Committee (BFK) on Wednesday.

Currently 21 percent is valid in Lithuania. VAT rate, and it is proposed to apply 9% to the cultural and sports sectors for a year and a half. reduced VAT rate.

Last week, at the initiative of Prime Minister Ingrida Šimonytė, the issue of the relief of value added tax (VAT) for the catering sector returned to the agenda of the Seimas. However, the workweek, which began with the consideration of a benefit, ended with several initiatives.

15 minutes He has already written that such a move by the rulers has been criticized by experts, warning that such a proposal could open a Pandora’s box: there will be no end to requests for new tax breaks. In addition, attention is drawn to the inconsistency of the rulers: just a month ago, the government announced an initiative to review and abolish part of the VAT benefits.

The benefits will require 100 million. euros

According to a project registered on Tuesday, the global pandemic and the consequent restrictions on economic activity have had a significant negative impact on the arts, culture and sports services sectors.

“The losses suffered and the high level of uncertainty surrounding the new pandemic outbreaks will have long-term consequences for the viability of these sectors. By releasing the quarantine restrictions, a temporary reduction of the value added tax (VAT) could be an effective tool to help the economic activities most affected by the pandemic, ”said the project.

Instead of the standard 21% currently applied to these sectors. It is proposed to apply a reduced rate of 9% to the VAT rate. ticket price for cultural, artistic and sporting events. The project mentions that the benefit is valid for all types of art and culture institutions, art and culture events, sporting events, sports clubs.

This benefit is expected to apply to cinemas as well.

The reduced rate would also apply to interpreting services provided by an actor, singer, musician, director, dancer, or other person who performs, sings, reads, recites, or performs literary, artistic, or folkloric works.

Last week, at the initiative of Prime Minister Ingrida Šimonytė, VAT relief for catering establishments returned to the Seimas agenda.

According to the preliminary calculations of the STI (estimating the turnover in 2019), the budget would lose 100.7 million LTL for such benefits. € 25.7 million € 75 million would be needed for a concession for cultural, artistic and sporting events; EUR for catering establishments.

Earlier it was announced that the reduction of the VAT rate for catering establishments could lead to 90 million. budget losses in euros. However, the STI specified that excluding the non-preferential trade in alcohol would result in a loss of LTL 75 million. euros.

The drafters of the amendment justify the need for such benefits by the fact that even after the end of the strict quarantine conditions, the venues of large gatherings may remain limited, so that the turnover of these business sectors may be significantly lower than in 2019..

“Consequently, the state budget losses in 2021-2022 could be less than 25.7 million euros. A VAT cut would help reduce the economic impact of the quarantine on the arts, culture and sports sectors. ”Said the amendment.

It is proposed to apply the benefit to companies for a year and a half, starting in 2021. July 1 to 2022 December 31

The draft establishes that European Union (EU) legislation allows a reduced VAT rate for these services, while a similar exemption applies to the arts, culture and sports sector in 19 of the 27 member states of the EU. In Spain and Italy, for example, cultural events are subject to a 10% rate. reduced VAT rate, 5% in Cyprus and 6% in Belgium. attend cultural and sporting events.

The Seimas will decide on the new VAT benefits.