Analytics, EU – Baltic States, Financial Services, Latvia, Legislation, Shadow economy, Taxation

Straujuma reminds that Latvia is one of the few European Union member states that could afford reducing taxes. Furthermore, as of January 1, the personal income tax rate has been reduced from 24 to 23%. The government is currently working on reducing social inequality in order to implement the differentiated non-taxable minimum already in 2016, the prime minister explains.

"I believe that we should turn away from talks about tax reduction and pay more attention to a more efficient tax administration and curbing the shadow economy," Straujuma says.

There is a consensus among international experts from the European Commission, the World Bank, and the International Monetary Fund that Latvia, instead of a steeper personal income tax rate reduction, should lay emphasis on raising the monthly non-taxable minimum and tax breaks for dependants.

As reported, at the beginning of 2015, the personal income tax rate in Latvia was cut 1%, from 24% to 23%.