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International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 16:08

Labor tax burden in Latvia heaviest in the Baltics

BC, Riga, 25.01.2016.Print version
Workers in Latvia have the highest tax burden in the Baltics, Swedbank Institute of Finances has concluded, informs LETA.

According to the institute's experts, 2016 has brought slight improvements for Latvia's employed population – the minimum monthly wage has been raised from EUR 360 to EUR 370, while tax breaks for dependants have increased from EUR 165 to EUR 175. The experts also note, however, that working-age adults, for instance, "full-time moms" can no longer be registered as dependants.

 

Furthermore, non-taxable minimum income has been differentiated in Latvia, however, whether the differentiated minimum income will be successful depends on several conditions – all employees must learn to fill out and submit their annual tax returns, and get used to plan their finances in not just monthly but annual periods.

 


 

Source: Swedbank Institute of Finances


A comparison of employed persons' incomes in three different salary categories in all Baltic countries finds that Estonia's labor taxes still are most favorable to employees, while Lithuania is in second place. Residents in Latvia have to pay larger part of their monthly incomes in taxes than residents in Lithuania or Estonia.

 

Swedbank Institute of Finances indicates that minimum monthly wages have also increased in Lithuania and Estonia. The minimum monthly wage in Lithuania has been raised EUR 25 to EUR 350, and in Estonia minimum monthly wage has increased even EUR 40, and currently stands at EUR 430.

 

Non-taxable minimum income for low income earners in Lithuania has been raised from EUR 166 to EUR 200 a month, and in Estonia from EUR 154 to EUR 170. Tax breaks for dependants in Estonia remain unchanged this year (EUR 154), while in Lithuania they have been raised twofold (from EUR 60 to EUR 120 per dependant).

 

As a result, a person earning the minimum wage in Latvia, with or without dependants, makes less than minimum income earners in Lithuania and Estonia.

 

Medium-income earners (those earning EUR 800 a month before tax) have the highest net wages in Estonia, and the lowest in Latvia.

 

Likewise, high income earners (EUR 1,000 a month before tax) benefit the most from the labor tax policy in Estonia, where they have the highest net salaries in the Baltic countries. These employees' monthly incomes, with or without dependants, are up to EUR 100 higher in Estonia than in Latvia and Lithuania. Although tax breaks for dependants in Estonia are not as generous as in Latvia or Lithuania, Estonia has much larger benefits for families with children.






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