The Competition Council (CC) of Latvia through competition advocacy prevented anticompetitive amendments to Latvia’s Value Added Tax Law (VAT Law). Draft amendments were discriminatory to private companies – organizers of cultural events – and therefore risked to restrict the competition and to hinder organization of commercial cultural events in the future.
In late 2015, the CC received a complaint from the organizer of one of the largest musical festivals in Baltics, Positivus Festival, to assess the draft amendments’ compliance with the competition law.
According to the draft amendments, the state and the municipal institutions and their owned companies, as well as the public benefit organizations when organizing concerts and other cultural events would be exempted from the VAT if no profit is made or the profit is used for the improvement of the cultural events’ services. Meanwhile, the private cultural event organizers in case of organizing similar events, e.g. concerts of the same genre, would have to pay the VAT.
After assessing the complaint, the CC concluded that amendments and unclear wordings within may potentially discriminate organizers of the private events and distort fair competition. To ensure a level playing field between public and private business, the CC through competition advocacy procedure submitted its objections and proposals to Parliament of Latvia.
After considering proposals and opinions from the involved parties, the Parliament decided to postpone the adoption of the amendments until 2017.
Ms Skaidrīte Ābrama, the Chairperson of the CC, said: “I am very pleased that the Competition Council and other involved parties in a timely manner have averted competition restrictions in the cultural sector. This case has proven that when responding quickly to topicalities within the market and cooperating with undertakings and NGOs it is possible to achieve success through the competition advocacy.”
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