Market Research

It is proposed to apply the VAT exemption for environmentally friendly vehicles

Content

In order to promote the acquisition and operation of renewable and environmentally friendly energy-efficient vehicles in Lithuania, it is proposed that such vehicles be subject to value added tax (VAT) exemption. Such a draft amendment to the Law on Value Added Tax was registered by the Parliamentarians representing "peasants" in the the Seimas (Parliament). They propose to set 9% VAT relief for hybrid motor vehicles and their repairs, when the vehicle is partially environmentally friendly. When the vehicle is completely green, initiators offer to apply a reduced VAT rate of 5 percent. According to the project, such a tariff would apply to electricity and other renewable energy vehicles and their repair. The law should come into force from 1st January 2019 and would be used for a limited period to create a market and infrastructure for clean vehicles. This would be a primary incentive to increase the volume of such transport in the country. This measure would be limited to 1st January of 2025 year. At present, legal regulation does not provide for VAT incentives for the acquisition of renewable and green energy-efficient vehicles in Lithuania.