The Lithuanian government has decided to reintroduce a reduced 9 percent VAT rate on district heating in October through the end of the year.
© DELFI / Kiril Čachovskij

The Cabinet approved on Wednesday the Finance Ministry's proposal to temporarily reintroduce the 9 percent rate. It is yet to be endorsed by the Seimas.

The government proposes to introduce a new 15 percent VAT rate starting next January and to apply it to district heating. The proposal will be tabled to the parliament along with next year's budget bill.

The Lithuanian Social Democratic Party, the Lithuanian Farmers and Greens Union's junior coalition partner, and the opposition Homeland Union–Lithuanian Christian Democrats are in favor of keeping the 9 percent VAT rate in place next year.

The VAT rate on district heating and hot water services was raised from 9 percent to the standard 21 percent in early June.

The LFGU and the Homeland Union in early July signed a deal under which the ruling party pledged to bring back the reduced VAT rate on heating in exchange for the opposition party's votes in favor of a state forest management reform.

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