Riigikogu approves law increasing VAT rate

The VAT rate for accommodation services from nine percent to 13 percent.
The VAT rate for accommodation services from nine percent to 13 percent. Source: Ken Mürk/ERR

On Monday, in an extraordinary session prior to the second reading, the Riigikogu passed a law that, starting January 1, 2024, will increase the VAT rate from 20 percent to 22 percent. The bill will be tied to the vote of confidence in the government.

59 Riigikogu members voted in favor of government-initiated legislation amending the Value-Added-Tax Act (147 SE), while 35 voted against it.

Initially, the government intended to eliminate the 9 percent preferential rate for accommodation services beginning in 2025 and raise to 22 percent. However, the second-reading amendment raises the VAT rate on accommodations from 9 to 13 percent. Also, beginning in 2025, the press's VAT rate will increase from 5 to 9 percent.

The purpose of the amendments, according to the explanatory memorandum, is to move toward a balanced budget by increasing government revenue and to make the tax system more efficient.

On May 17, the measure passed its first reading and 240 amendments were submitted by the deadline. The government decided on June 8 to attach a vote of confidence to the measure prior to its second reading. The proposed amendments therefore will not be submitted to a vote.

The extraordinary session that began on June 19 will continue until all agenda items have been addressed.


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Editor: Kristina Kersa

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