The ministry estimates that the state will lose approximately 110 million euros in budget revenue in those two years because of the measure.
“Considering the market analysis and the current prices, this proposal is being submitted for two more heating seasons; it would be in effect between October 2022 and April 30, 2023 as well as during the following heating season,” Finance Minister Gintare Skaiste told a news conference on Wednesday.
During the last heating season, the state reimbursed the 9 percent VAT rate, initially applied on heating, between January 1 and the end of April as the temporary zero VAT rate on district heating for households was only approved in mid-March but it was applied retroactively to heating bills from January 1 until the end of the heating season.
The zero VAT rate was proposed in view of current trends and the futures market, which showed that prices for energy would remain elevated for some more time, Skaiste said.
She estimated that the state would lose 54 million euros in budget revenue due to this measure during the 2022-2023 heating season and another 57 million euros during the 2023-2024 heating season, but added that specific amounts would depend on actual heating prices.