The repeal comes about a year after Denmark passed the first-in-the-world tax on the fat content of food, The Copenhagen Post reported.
The retailers' move was part of Parliament's negotiations on the 2013 budget, which also includes cancellation of a tax on sugar content that would have gone into effect next year, government officials said.
Food producers and others criticized the tax, saying it it raised the price of Danish products to levels more expensive than imports and it increased administrative work for the food producers required to collect it.
Businesses said similar situations would arise with the sugar tax if it were levied.
Eliminating the two taxes, as well as decisions to scrap a planned tax hike on Danes working abroad and reducing a tax on electric heat -- sent the government scrambling to make up the $682 million hole left in their revenue projections, the Post said.
Revenue will be raised by, among other things, lowering the standard deduction, raising the basic tax rate, lawmakers said.